<Page>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 21, 2001
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
LEASE INVESTMENT FLIGHT TRUST
(Exact name of Registrant as specified in its charter)
<Table>
DELAWARE 6159 51-65219
(State or other jurisdiction (Primary standard (I.R.S. Employer
of industrial Identification No.)
incorporation or organization) classification code number)
</Table>
1100 NORTH MARKET STREET
RODNEY SQUARE NORTH
WILMINGTON, DELAWARE 19890
(302) 651-1000
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
DAN VANASKEY, JR.
1100 NORTH MARKET STREET
RODNEY SQUARE NORTH
WILMINGTON, DELAWARE 19890
(302)651-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
------------------------------
WITH COPIES TO:
<Table>
DONALD B. BRANT, JR., ESQ. LEWIS C. LEDYARD, III
ELLIOT GEWIRTZ, ESQ. MORRIS, JAMES, HITCHENS & WILLIAMS
MILBANK, TWEED, HADLEY & MCCLOY LLP 222 DELAWARE AVENUE
ONE CHASE MANHATTAN PLAZA WILMINGTON, DELAWARE 19899
NEW YORK, NEW YORK 10005 (302) 888-6917
(212) 530-5474
</Table>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) REGISTRATION FEE
Class A-1 Floating Rate Asset Backed Notes, Series
2001-1 $400,000,000 100% $400,000,000 $100,000
Class A-2 Floating Rate Asset Backed Notes, Series
2001-1 $260,000,000 100% $260,000,000 $ 65,000
Class A-3 Floating Rate Asset Backed Notes, Series
2001-1 $425,000,000 100% $425,000,000 $106,250
Class B-1 Floating Rate Asset Backed Notes, Series
2001-1 $ 60,000,000 100% $ 60,000,000 $ 15,000
Class B-2 Fixed Rate Asset Backed Notes, Series
2001-1 $ 83,000,000 100% $ 83,000,000 $ 20,750
Class C-1 Floating Rate Asset Backed Notes, Series
2001-1 $ 69,000,000 100% $ 69,000,000 $ 17,250
Class C-2 Fixed Rate Asset Backed Notes, Series
2001-1 $ 72,000,000 100% $ 72,000,000 $ 18,000
</Table>
(1) Estimated pursuant to Rule 457(f) under the Securities Act of 1933 solely
for purposes of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<Page>
PROSPECTUS
$1,369,000,000
LEASE INVESTMENT FLIGHT TRUST
OFFER TO EXCHANGE
CLASS A-1 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS A-2 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS A-3 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS B-1 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS B-2 FIXED RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS C-1 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
AND CLASS C-2 FIXED RATE ASSET BACKED NOTES, SERIES 2001-1
FOR ANY AND ALL OUTSTANDING
CLASS A-1 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS A-2 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS A-3 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS B-1 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS B-2 FIXED RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS C-1 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
AND CLASS C-2 FIXED RATE ASSET BACKED NOTES, SERIES 2001-1
This prospectus and the accompanying letter of transmittal relate to the
offer by Lease Investment Flight Trust, or LIFT for short, to exchange up to
$1,369,000,000 aggregate principal amount of new exchange notes for any and all
outstanding notes of the same class that were issued in a private offering by
LIFT on June 26, 2001.
(1) The exchange offer expires 5:00 p.m., New York City time, on ,
2001, unless extended.
(2) The terms of each class of exchange notes are substantially identical
to the terms of the same class of originally issued notes, except that the
exchange notes will be freely transferable and issued free of covenants
regarding exchange and registration rights.
(3) All notes that are validly tendered and not validly withdrawn will be
exchanged.
(4) Tenders of notes may be withdrawn at any time prior to expiration of
the exchange offer.
(5) Holders of originally issued notes do not have any appraisal or
dissenters' rights in connection with the exchange offer. Notes not exchanged in
the exchange offer will remain outstanding and be entitled to the benefits of
the indenture, but except under very limited circumstances will have no further
exchange or registration rights.
(6) The originally issued notes were listed on the Luxembourg Stock
Exchange on , 2001. LIFT has applied to list the exchange notes on the
Luxembourg Stock Exchange.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF FACTORS
YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE EXCHANGE NOTES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
LIFT MAY AMEND OR SUPPLEMENT THIS PROSPECTUS FROM TIME TO TIME BY FILING
AMENDMENTS OR SUPPLEMENTS AS REQUIRED. PLEASE READ THIS ENTIRE PROSPECTUS, THE
ACCOMPANYING LETTER OF TRANSMITTAL, THE RELATED DOCUMENTS AND ANY AMENDMENTS OR
SUPPLEMENTS CAREFULLY BEFORE MAKING YOUR INVESTMENT DECISION.
THE DATE OF THIS PROSPECTUS IS , 2001.
<Page>
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
--------
Where You Can Find More Information......................... ii
Summary..................................................... 1
Risk Factors................................................ 11
Forward-Looking Statements.................................. 16
Use of Proceeds of the Exchange Notes....................... 17
The Exchange Offer.......................................... 18
Lease Investment Flight Trust............................... 29
Portfolio Information....................................... 47
The Commercial Aircraft Industry............................ 60
Management of LIFT.......................................... 83
Capitalization.............................................. 86
Selected Consolidated Financial Data........................ 86
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 87
Note Payment Assumptions.................................... 90
Description of the Indenture and the Notes.................. 103
Reports to Noteholders...................................... 142
Book-Entry Registration, Global Clearance and Settlement.... 145
Plan of Distribution........................................ 148
U.S. Federal Income Tax Consequences........................ 149
ERISA Considerations........................................ 153
Legal Matters............................................... 153
Luxembourg Listing and General Information.................. 154
Experts..................................................... 154
Index to Financial Statements............................... F-1
Appendices.................................................. 1
</Table>
i
<Page>
WHERE YOU CAN FIND MORE INFORMATION
LIFT became subject to the information reporting requirements of the
Securities Exchange Act of 1934 upon the effectiveness of the Registration
Statement on Form S-4 filed by LIFT under the Securities Act with respect to the
exchange notes and in accordance with the Exchange Act will file reports, proxy
statements and other information with the Securities and Exchange Commission.
Any reports and other information filed by LIFT with the SEC may be inspected
and copied at the public reference facilities maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will
also be available for inspection and copying at the regional offices of the SEC
located at 7 World Trade Center, New York, New York 10048 and at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
SEC maintains a web site (http://www.sec.gov) that contains the registration
statement of which this prospectus is a part and will contain future reports and
other information filed by LIFT.
This prospectus does not contain all the information set forth in the
registration statement and its exhibits and schedules, some portions of which
have been omitted as permitted by the rules and regulations of the SEC. For
further information with respect to LIFT and the exchange notes, please read the
registration statement and the exhibits and schedules filed with it. They are on
file at the offices of the SEC and may be obtained upon payment of the fee
prescribed by the SEC or may be examined without charge at the offices of the
SEC. Statements contained in this prospectus as to the contents of any documents
are not necessarily complete, and, in each such instance, are qualified in all
respects by reference to the applicable documents filed with the SEC.
The notes originally issued to you were listed on the Luxembourg Stock
Exchange on , 2001, and the exchange notes will be listed upon issuance,
subject only to notice of issuance. The constitutive documents of LIFT and the
legal notice relating to the issuance of the notes have been deposited with the
Registrar of the District Court in Luxembourg-Greffier en Chef du Tribunal
d'Arrondissement de et a Luxembourg where they will be available for inspection
and where these documents will be obtainable upon request. Copies of this
prospectus and the reports to the holders of the notes referred to under
"Reports to Noteholders" are available at the office of the listing agent in
Luxembourg: Kredietbank S.A. Luxembourgeoise, 43, Boulevard Royal, L-2955
Luxembourg. Financial information regarding LIFT will be included in LIFT's
quarterly reports on Form 10-Q and annual reports on Form 10-K and will be
available at the office of the listing agent in Luxembourg after the respective
reports are filed with the SEC.
ii
<Page>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS AND DOES
NOT CONTAIN ALL THE INFORMATION THAT IS IMPORTANT TO YOU. PLEASE READ THE ENTIRE
PROSPECTUS FOR MORE COMPLETE INFORMATION ABOUT LIFT, THE NOTES AND THE EXCHANGE
OFFER AND BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
LEASE INVESTMENT FLIGHT TRUST
LIFT was formed on June 13, 2001 as a Delaware business trust. On June 26,
2001, LIFT acquired one direct subsidiary, LIFT Trust-Sub 1, or LIFT 1, a
Delaware business trust, from Automatic LIFT I, LP. LIFT I owns various domestic
and foreign subsidiaries that own or lease aircraft. The authorized business of
LIFT and its subsidiaries is limited to buying, owning, leasing, maintaining,
operating or selling aircraft. LIFT's principal executive offices are located at
1100 North Market Street, Rodney Square North, Wilmington, Delaware 19890. Its
telephone number is (302) 651-1000. Affiliates of Automatic LLC own indirectly
all the beneficial interest of LIFT.
On June 26, 2001, LIFT issued $1,429.0 million of its initial notes,
consisting of $400.0 million of its initial Class A-1 Notes, $260.0 million of
its initial Class A-2 Notes, $425.0 million of its initial Class A-3 Notes,
$60.0 million of its initial Class B-1 Notes, $83.0 million of its initial
Class B-2 Notes, $69.0 million of its initial Class C-1 Notes, $72.0 million of
its initial Class C-2 Notes, $35.0 million of its initial Class D-1 Notes and
$25.0 million of its initial Class D-2 Notes. As of the date of this prospectus,
$ million of LIFT's initial Class A-1 Notes, $ million of
LIFT's initial Class A-2 Notes, $ million of LIFT's initial Class A-3
Notes, $ million of LIFT's initial Class B-1 Notes, $
million of LIFT's initial Class B-2 Notes, $ million of LIFT's
initial Class C-1 Notes, $ million of LIFT's initial Class C-2 notes,
$ million of LIFT's initial Class D-1 notes and $ million of
LIFT's initial Class D-2 notes were outstanding. The outstanding notes are not,
and the exchange notes will not be, obligations of, or guaranteed by, General
Electric Capital Corporation or any of its affiliates. The exchange notes are
not being offered for sale by General Electric Capital Corporation or any of its
affiliates. The initial Class D Notes are not part of the exchange offer.
LIFT used the proceeds from the sale of the initial notes to pay the cash
purchase price described in the following paragraph, to repay the bridge notes
described in the following sentence, to fund cash reserves and to pay
transaction expenses. LIFT is authorized to issue additional notes to acquire
additional aircraft. On June 26, 2001, LIFT 1 issued $1,310.5 million of bridge
notes to Credit Suisse First Boston. The proceeds of the bridge notes were used
by LIFT 1 to pay the aircraft purchase price to General Electric Capital
Corporation as described below.
Also on June 26, 2001, LIFT and its subsidiaries agreed with Automatic LIFT
I, LP to purchase LIFT 1 under a beneficial interest purchase agreement, to pay
to Automatic the cash purchase price of approximately $5.5 million and to repay
the bridge notes on behalf of LIFT 1. As a result, LIFT 1 became a wholly-owned
subsidiary of LIFT on June 26, 2001.
On June 26, 2001, LIFT 1 agreed to purchase the 39 initial aircraft from
General Electric Capital Corporation and its affiliates under an asset purchase
agreement and paid the full aircraft purchase price for all 39 aircraft from the
proceeds of the bridge notes. As of , 2001, of the 39 initial aircraft had
been delivered to LIFT 1. General Electric Capital Corporation and the other
sellers are obligated to deliver all of the remaining initial aircraft or
substitute aircraft meeting the criteria specified in that agreement no later
than January 22, 2002. If any undelivered aircraft is significantly damaged or
is destroyed before delivery, the sellers may elect either to pay over any
insurance proceeds or to deliver a substitute aircraft. If an undelivered
aircraft or a substitute aircraft is not timely delivered for any other reason,
General Electric Capital Corporation is required to refund a portion of the
purchase price to LIFT 1.
1
<Page>
As of December 31, 2000, the 39 initial aircraft had an aggregate initial
appraised value of approximately $1,551.491 million. As of the date of the
prospectus, 38 of the initial aircraft are leased to 24 lessees based in 17
countries. As of the date of the prospectus, one aircraft is off-lease. Delivery
of any initial aircraft is to include the lessor's rights under the related
lease. Pending delivery of the initial aircraft, the sellers will pay LIFT and
its subsidiaries an amount equal to all security deposits under the leases as of
June 26, 2001 and are in general required to pay LIFT and its subsidiaries an
amount equal to all rents, maintenance reserves and other payments made under
the leases after June 26, 2001. Pending delivery, LIFT will, in general, be
responsible for all amounts payable by the lessor under the leases after
June 26, 2001 in respect of any maintenance. LIFT and its subsidiaries must
accept delivery of an initial aircraft even if the related lessee is not current
on its payment obligations.
2
<Page>
SELECTED FEATURES OF THE EXCHANGE NOTES AND THE INITIAL CLASS D NOTES
The following table summarizes selected terms and attributes of the exchange
notes and the initial Class D Notes. You should not view the ratings of the
notes as a recommendation to buy, sell or hold the notes. The ratings only
address the likelihood of the timely payment of interest at the rate specified
below and the ultimate payment of principal on those notes. The ratings do not
address other payments on the notes or the effect of any withholding tax on the
notes.
<Table>
<Caption>
CLASS A-1 CLASS A-2 CLASS A-3 CLASS B-1 CLASS B-2
NOTES NOTES NOTES NOTES NOTES
-------------------- --------------- -------------------- --------------- ------------
Initial Aggregate
Amount.................. $400,000,000 $260,000,000 $425,000,000 $60,000,000 $83,000,000
Aggregate Principal Amount
as of / /01..........
Ratings
Fitch................. AA AA AA A A
Moody's............... Aa2 Aa2 Aaa A2 A2
Standard & Poor's..... AA AA AA A A
Interest Rate............. LIBOR+0.390% LIBOR+0.430% LIBOR+0.430% LIBOR+1.120% 7.124%
Initial Loan to Value..... 66.38% 66.38% 66.38% 75.13% 75.13%
Initial Loan to Assumed
First Year's Net
Revenue................. 7.8x 7.8x 7.8x 8.8x 8.8x
Assumed Interest Coverage
Ratio................... 2.1x 2.1x 2.1x 1.4x 1.4x
Expected Weighted Average
Life (Years)............ 2.05 3.05 4.96 10.20 10.20
Expected Initial Principal July 15,
Payment Date............ July 15, 2003 July 15, 2004 July 15, 2001 July 15, 2001 2001
Expected Final Payment
Date.................... July 15, 2003 July 15, 2004 August 15, 2010 May 15, 2018 May 15, 2018
July 15,
Final Maturity Date....... July 15, 2031 July 15, 2031 July 15, 2016 July 15, 2031 2031
</Table>
<Table>
<Caption>
CLASS C-1 CLASS C-2 CLASS D-1 CLASS D-2
NOTES NOTES NOTES NOTES
--------------- ------------ --------------- ------------
Initial Aggregate Amount................................ $69,000,000 $72,000,000 $35,000,000 $25,000,000
Ratings
Aggregate Principal Amount as of / /01...............
Fitch................................................. BBB BBB BB BB
Moody's............................................... Baa2 Baa2 Ba2 Ba2
Standard & Poor's..................................... BBB BBB BB BB
Interest Rate........................................... LIBOR+2.120% 8.093% LIBOR+2.000% 8.000%
Initial Loan to Value................................... 83.76% 83.76% 87.43% 87.43%
Initial Loan to Assumed First Year's Net Revenue........ 9.8x 9.8x 10.3x 10.3x
Assumed Interest Coverage Ratio......................... 1.2x 1.2x 1.2x 1.2x
Expected Weighted Average Life (Years).................. 10.60 10.60 10.60 10.60
July 15, July 15,
Expected Initial Principal Payment Date................. July 15, 2002 2002 July 15, 2002 2002
Expected Final Payment Date............................. May 15, 2018 May 15, 2018 May 15, 2018 May 15, 2018
July 15, July 15,
Final Maturity Date..................................... July 15, 2031 2031 July 15, 2031 2031
</Table>
The exchange offer applies to the initial Class A, Class B, and Class C
Notes. The exchange offer does not apply to the initial Class D Notes, but a few
terms of the Class D Notes are described where useful to understanding the
priority of payments.
3
<Page>
SUMMARY OF TERMS OF THE EXCHANGE NOTES
<Table>
The Exchange Notes........................ LIFT will issue the exchange notes under the trust
indenture dated as of June 26, 2001 between it, LIFT 1,
as the bridge issuer, Phoenix American Financial
Services, Inc., as the administrative agent, and Bankers
Trust Company, who will act as the trustee.
Payment Dates............................. The 15th day of each month or, if that date is not a
business day in New York, New York, London, England and,
with respect to any action to be taken there,
Luxembourg, the next day that is a business day.
Interest.................................. LIFT must pay interest on the exchange notes at a rate
per annum of LIBOR plus 0.39% for the Class A-1 Notes,
LIBOR plus 0.43% for the Class A-2 Notes, LIBOR plus
0.43% for the Class A-3 Notes, LIBOR plus 1.12% for the
Class B-1 Notes, 7.124% for the Class B-2 Notes, LIBOR
plus 2.12% for the Class C-1 Notes and 8.093% for the
Class C-2 Notes. Interest is payable monthly on each
payment date.
Calculation of Interest................... Interest based on LIBOR will be calculated on the basis
of a year of 360 days and the actual number of days
elapsed. Interest at a fixed rate will be calculated on
the basis of a year of 360 days and of twelve 30-day
months.
Maturity Step-Up Interest................. If any Class A-1 Note or Class A-2 Note is not paid in
full on or before its expected maturity date, interest
for that Class A-1 Note or Class A-2 Note will accrue
after that date at a rate equal to its existing rate
plus 0.50% per annum. Payments of interest at the
increased rate have a lower payment priority than
regular interest payments and will not be rated.
Additional Interest....................... Accrued interest and premium on any note that is not
paid when due will bear interest at the then current
interest rate for that note. For this purpose, the then
current interest on any note will include any rate
increase resulting from the failure to have paid any
Class A-1 Note or Class A-2 Note on or before its
expected maturity date. Payments of interest on past due
interest or premium have a lower payment priority than
regular interest payments and will not be rated.
Expected Principal Payments............... Principal payments are not fixed in amount but rather
are determined monthly based on revenues collected and
costs incurred prior to the relevant calculation date.
Effectively, all revenues collected during each monthly
period are, after payment of expenses, paid out or
reserved in accordance with the payment priorities set
out on page 114. LIFT has,
</Table>
4
<Page>
<Table>
however, determined expected principal payments of the
notes based on revenue assumptions regarding primarily:
(1) the timing and amount of payments under current
leases and future leases;
(2) the terms of future leases;
(3) LIFT's ability to refinance the Class A-1 and
Class A-2 Notes; and
(4) the amount of operating costs incurred in the
ordinary course of LIFT's business.
These expected payments are reflected in the "Expected
Final Payment Date" line item in the table set out on
page 3 and in the table entitled "Percent of Initial
Principal Balance of the Initial Notes Based on the
Assumed Case" on page 93. It is unlikely that actual
experience will correspond to those assumptions. The
timing and amount of the principal payments on any note
may, therefore, vary from the expected principal
payments and may vary significantly.
If revenues decline too significantly, LIFT may be able
to repay only part of the principal of the notes.
For a more detailed explanation of the formulas that
determine principal payments and the assumptions on
which the expected final payment dates are based, please
see the following:
Pages 11 to 15 and 29 to 36, for various risk factors
and business conditions, respectively, that can, and
likely will determine and result in monthly variances in
revenues and expenses that will affect the principal
payments on the notes.
Pages 104 to 109, for the several mathematical formulas
that are applied to the monthly revenues received to
determine interest, principal and other payments.
Pages 90 to 102, for the various assumptions that were
used to determine the expected final payment dates
referred to above as well as the expected average life
and the expected final payment date of each of the
classes of notes.
Pages 114 to 119, for the priorities by which these
payments are allocated among the classes of notes and
LIFT's other obligations.
Pages 94 to 102, for the effect that a variety of
specified changes in these assumptions would have on the
expected final payment dates and average life of the
notes.
Optional Redemption of the Notes.......... LIFT may at any time redeem any class or subclass of
notes by giving specified required notices and
depositing the necessary funds with the security
trustee. A redemption prior to acceleration of the notes
may be of the whole or any part
</Table>
5
<Page>
<Table>
of any class or subclass of notes. A redemption after
acceleration of the notes upon default may only be of
all of the notes. LIFT may redeem notes only from funds
other than its and its subsidiaries' operating cash
flow, but it may use the proceeds of notes issued to
refinance the redeemed notes.
Except in a redemption to avoid material taxes or after
acceleration, LIFT must pay a premium when it redeems
any notes. Redemption payments are not subject to the
order of payment priorities described in this summary.
Proceeds from the sale or loss of an aircraft will be
paid in accordance with those payment priorities, and
any resulting payments of principal will not be deemed a
redemption.
Refinancing Notes and Additional Notes.... LIFT may redeem outstanding notes using the proceeds of
refinancing notes issued under the indenture governing
the notes. Refinancing notes need not be of the same
class or subclass as the notes they refinance and may be
issued in any subclasses of Class A, Class B, Class C
and Class D Notes. LIFT also has the right to finance
the acquisition of additional aircraft in part through
the issuance of additional notes under the indenture and
additional beneficial interests. The additional notes
may be issued in any subclass of Class A, Class B,
Class C and Class D. Any class or subclass of
refinancing notes or additional notes will have the same
payment priority as other notes of the class and
subclass to which those notes belong but may not ever
have a payment priority higher than that of the Class A
Notes.
Sources of Payments on the Notes.......... The only sources of payment for the notes and the other
obligations of LIFT and its subsidiaries consist of
(1) payments from the leasing of aircraft owned or to be
acquired by them;
(2) sales and insurance proceeds;
(3) amounts drawn under any credit support facilities;
(4) net payments under any swap or other hedging
agreements;
(5) amounts on deposit in the accounts held by the
security trustee and related investment earnings; and
(6) net cash proceeds received from the sale of any
refinancing notes.
LIFT will make payments on the notes only after the
payment of ongoing expenses.
Security for the Notes.................... The notes are direct obligations of LIFT. Holders will
not have any lien or similar interest in any of the
aircraft. LIFT and its subsidiaries will grant to the
security trustee for the
</Table>
6
<Page>
<Table>
benefit of the holders of the notes and the other
secured parties a security interest in:
(1) the ownership interests in the aircraft owning
subsidiaries of LIFT;
(2) the individual aircraft leases;
(3) any cash or other assets contained in the accounts
held by the security trustee; and
(4) rights under the servicing agreement for the
aircraft and other service, credit support and hedge
agreements.
Cash Reserves............................. Cash reserves as of the date of this prospectus are
approximately $83.0 million, exclusive of security
deposits and maintenance reserves under the leases. Cash
reserves provide a source of liquidity to pay ongoing
expenses, amounts due under senior swap agreements and
interest on the notes. If cash reserves fall below
$33.0 million, LIFT may continue to pay ongoing
expenses, senior swap amounts and interest on the
Class A Notes but may not make any payments having a
lower payment priority until the reserves have been
replenished to that amount. Similar cash reserve levels
have been set as to the Class B, Class C and Class D
Notes and are available for payments that rank prior to,
or have the same ranking as, payments of interest on the
Class B, Class C and Class D Notes, respectively. The
reserve levels will reduce as principal is paid and may
be reduced by LIFT if the rating agencies confirm that
they will not lower, qualify or withdraw their ratings.
Operating Covenants....................... LIFT may not enter into any future lease unless it is in
compliance with geographic and other concentration
limits. This restriction does not apply to renewals,
extensions or restructurings of existing leases. LIFT
may enter into a future lease not meeting these
requirements if the rating agencies confirm that they
will not lower, qualify or withdraw their ratings of any
notes as a result.
Tax Withholding........................... LIFT is not obligated to make any additional payments on
the notes to offset any withholding or deduction from
payments on the notes required under applicable law. If
any withholding or deduction is required as to payments
on the notes and LIFT does not redeem the notes, the net
amount of interest received by the holders of the notes
will be reduced by the amount of such withholding or
deduction.
</Table>
7
<Page>
OVERVIEW OF PRIORITY OF PAYMENTS
The following list summarizes the order of priority of payments on the notes
and other obligations of LIFT out of all funds received by LIFT and its
subsidiaries other than security deposits and funds required by any lease to be
segregated and funds to be used to redeem the notes. LIFT may incur any amount
of additional notes at any and at all levels of payment priority if the proceeds
are used to acquire more aircraft and for related purposes and if the rating
agencies confirm that they will not lower, qualify or withdraw their ratings of
any notes as a result. For definitions of the terms used below and further
information about the priority of payments and changes in the order of
priorities upon acceleration of the notes, please see "Description of the
Notes--Priority of Payments".
- Regularly occurring fees, indemnities and other ongoing expenses
- Class A Notes interest and interest rate and currency swap payments that
are senior
- Payments under any credit facilities or to cash collateral accounts at the
Class A Notes level
- Replenishment of reserves to the lowest required level
- Class A Notes Minimum Principal Payment Amount
- Class B Notes interest
- Payments under any credit facilities or to cash collateral accounts at the
Class B Notes level
- Replenishment of reserves to the next required level
- Class B Notes Minimum Principal Payment Amount
- Class C Notes interest
- Payments under any credit facilities or to cash collateral accounts at the
Class C Notes level
- Replenishment of reserves to the next required level
- Class C Notes Minimum Principal Payment Amount
- Class D Notes interest
- Payments under any credit facilities or to cash collateral accounts at the
Class D Notes level
- Replenishment of reserves to the highest required level
- Class D Notes Minimum Principal Payment Amount
- Anticipated expenses other than for modifications of aircraft and
refinancings
- Increased interest on the Class A-1 Notes and the Class A-2 Notes and
interest on past due interest and premium
- Class A Notes Scheduled Principal Payment Amount
- Class B Notes Scheduled Principal Payment Amount
- Class C Notes Scheduled Principal Payment Amount
- Class D Notes Scheduled Principal Payment Amount
- Reimbursement of any payments made by LIFT to cure note defaults from
other funds
- Expenses related to modifications of aircraft and refinancings
- Class A Notes outstanding principal
- Class B Notes outstanding principal
- Class C Notes outstanding principal
- Class D Notes outstanding principal
- Interest rate and currency swap payments that are subordinated
- Additional fees under the aircraft servicing agreement
- Remainder to LIFT for distribution to the holders of its beneficial
interests
8
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SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
<Table>
The Exchange Offer..................... LIFT is offering to exchange up to $1,369 million
aggregate principal amount of exchange notes for an equal
aggregate principal amount of outstanding notes of the
same class. The form and terms of each class of exchange
notes are substantially the same as the form and terms of
the outstanding notes of the same class, except that the
exchange notes have been or will be registered under the
Securities Act and will not bear legends restricting their
transfer.
Registration Rights Agreement.......... You have rights to exchange your Class A, Class B or
Class C Notes for exchange notes of the same class, and
the exchange offer is intended to satisfy those rights.
After the exchange offer is complete, you will no longer
be entitled to any exchange or registration rights with
respect to your notes unless you tender your notes and do
not receive freely tradable exchange notes in the exchange
offer or you are ineligible to participate in the exchange
offer.
Resales of the Exchange Notes.......... LIFT believes that the exchange notes may be resold by you
without compliance with the registration and prospectus
delivery provisions of the Securities Act if:
(1) you are acquiring the exchange notes in the ordinary
course of your business;
(2) you are not participating, do not intend to
participate and have no arrangement or understanding with
any person to participate, in a distribution of the
exchange notes;
(3) you are not an affiliate of LIFT; and
(4) you are not an initial purchaser who acquired notes
directly from LIFT in the initial offering.
If you do not meet those conditions, you may incur
liability under the Securities Act if you transfer any
exchange note without delivering a prospectus meeting the
requirements of the Securities Act. LIFT does not assume,
or indemnify you against, that liability.
Each broker-dealer that receives exchange notes for its
own account in exchange for the notes originally issued to
it, where such original notes were acquired by that
broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of
exchange notes. A broker-dealer may use this prospectus
for an offer to resell or to otherwise transfer the
exchange notes.
Expiration Date........................ The exchange offer will expire at 5:00 p.m., New York City
time, on , 2002, unless LIFT decides to extend the
exchange offer.
</Table>
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<Table>
Conditions to the Exchange Offer....... The only conditions to completing the exchange offer are
that the exchange offer not violate applicable law or any
applicable interpretation of the staff of the SEC; that no
action or proceeding is instituted with respect to the
exchange offer; that no law, rule or regulation is adopted
that LIFT expects would impair its ability to proceed with
the exchange offer; and that LIFT obtains all necessary
governmental approval for the exchange offer.
Procedures for Tendering Notes......... The outstanding Class A, Class B and Class C Notes were
issued as global securities in fully registered form.
Beneficial interests in those notes held by direct or
indirect participants in The Depository Trust Company
through depositary interests are shown on records
maintained in book-entry form by DTC with respect to its
participants. Transfers can be made only on those records.
If you are a holder of a note held in the form of a
book-entry interest and you wish to tender your note under
the exchange offer, you must transmit through a financial
institution that is a participant in DTC's book-entry
transfer facility system on or prior to the expiration of
the exchange offer a computer-generated message
transmitted by means of DTC's Automated Tender Offer
Program system together with a part of a confirmation of
book-entry transfer in which you acknowledge and agree to
be bound by the terms of the letter of transmittal.
Special Procedures for Beneficial If you are the beneficial owner of notes that are
Owners............................... registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and you wish to
tender your notes, you should promptly contact the person
in whose name your notes are registered and instruct that
person to tender on your behalf.
Guaranteed Delivery Procedures......... If you wish to tender your notes and cannot complete the
procedure for book-entry transfer on a timely basis, you
may still tender your notes in accordance with the
guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures".
Acceptance of Notes and Delivery of Unless the conditions to the exchange offer are not met or
Exchange Notes....................... tendered notes are properly withdrawn, LIFT will accept
any and all outstanding Class A, Class B and Class C Notes
that are properly tendered in the exchange offer prior to
5:00 p.m., New York City time, on the expiration date.
Withdrawal............................. You may withdraw the tender of your notes at any time
prior to 5:00 p.m., New York City time, on the expiration
date. LIFT will return to you any notes not accepted for
exchange for any reason without expense to you as soon as
practicable after withdrawal.
Exchange Agent......................... Bankers Trust Company is serving as the exchange agent for
the exchange offer.
Federal Income Tax Consequences........ The exchange of your notes in the exchange offer will not
be a taxable event for federal income tax purposes.
</Table>
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RISK FACTORS
Please consider carefully the risks described below before making a decision
to accept the exchange notes.
LIFT IS A SPECIAL PURPOSE ENTITY, AND THEREFORE YOU ARE RELYING ON ONLY A
LIMITED NUMBER OF REVENUE SOURCES FOR THE REPAYMENT OF YOUR NOTES.
The sole sources of payment for the exchange notes, the Class D Notes and
the other obligations of LIFT and its subsidiaries are:
(1) funds derived from the aircraft owned or to be acquired by them,
including: rent payments under the leases, security deposits, maintenance
reserves and other payments under existing leases and any future leases,
insurance and sales proceeds;
(2) liquidity reserves funded out of the proceeds of the initial notes
or that may be funded out of the proceeds of any future notes or beneficial
interests in LIFT or provided through any future credit facilities;
(3) net payments under swap or other hedging agreements;
(4) investment earnings; and
(5) net proceeds from the sale of any notes issued to refinance other
notes.
It is unlikely that LIFT would be able to obtain any alternate source of
funds if any of its limited sources of funds are insufficient to pay the notes
and its other obligations.
LIFT WILL NOT RECEIVE ENOUGH REVENUES FROM ITS CURRENT AIRCRAFT LEASES TO
REPAY YOUR NOTES IN FULL, AND THEREFORE IT WILL HAVE TO RE-LEASE OR SELL THE
AIRCRAFT IN ORDER TO REPAY YOU IN FULL.
LIFT will need to re-lease aircraft as current leases expire in order to
continue to generate sufficient revenue to pay the notes in full. LIFT's ability
to re-lease aircraft will depend on general market and competitive conditions.
Some of LIFT's competitors may have greater access to financial resources and,
as a result of restrictions contained in the indenture, may have greater
operational flexibility. If LIFT is not able to re-lease an aircraft, it may
need to attempt to sell the aircraft to provide funds for note payments.
OVER THE LIFE OF THE AIRCRAFT PORTFOLIO, IT IS LIKELY THAT SOME OF THE
AIRCRAFT LESSEES WILL EXPERIENCE FINANCIAL DIFFICULTIES AND DELAY OR MISS RENTAL
PAYMENTS TO LIFT WHICH MAY IN TURN ADVERSELY AFFECT THE TIMELY OR FULL REPAYMENT
OF YOUR NOTES.
Many of LIFT's existing lessees are in a weak financial position, and this
is likely to be the case with future aircraft lessees as well. In a portfolio
the size of LIFT's, you should expect that some aircraft lessees from time to
time, and possibly in the near future, will be slow in paying or will fail to
pay in full. In some instances, late payments are recovered, together with
default interest or other similar payments required by the leases. In other
instances, a restructuring of the lease is required, involving anything from a
simple rescheduling of payments to the termination of a lease without receiving
all or any of the past due amounts. With respect to LIFT's current lessees,
recently several lessees have been slow in making lease payments, and recently
restructurings have been worked out with two lessees involving three aircraft.
One of these lessees recently made a request for a two-month rental deferral
with respect to several aircraft, but the request does not apply to any of the
initial aircraft. You should expect that future restructurings with some of the
lessees will occur. In addition to restructurings, agreements recently have been
entered into with some lessees in the portfolio granting rental reductions in
return for other benefits to the lessor, such as a lease extension. One of these
lessees recently made a request for further rental reductions which may apply to
some of the initial aircraft. You should expect that future rental reductions of
this type will occur.
A delayed or missed rental payment from a lessee decreases LIFT's revenues
and may adversely affect the timely or full repayment of your notes. Some level
of delinquency has been assumed for
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purposes of calculating the estimated final payment date for your notes. Default
levels may increase over time, particularly if current economic conditions
deteriorate.
AS A RESULT OF THE RECENT TERRORIST ATTACKS ON THE UNITED STATES, SOME IF
NOT MOST OF THE INITIAL LESSEES MAY EXPERIENCE SIGNIFICANTLY LOWER REVENUES,
INCREASED COSTS AND ECONOMIC UNCERTAINTIES WHICH MAY ADVERSELY AFFECT THE TIMELY
REPAYMENT OF THE NOTES.
On September 11, 2001, terrorists high-jacked and crashed four United States
commercial aircraft, with attendant significant loss of life, property damage
and economic disruption. As a result, air travel in the United States was
suspended for several days, restrictions have been placed on United States air
travel, airline costs such as aircraft insurance and aircraft security have
increased and passenger demand for air travel has significantly declined. These
events may also affect the ability of airlines to obtain insurance.
Consequently, the initial lessees, particularly those directly or indirectly
serving the United States, are likely to incur higher costs and lower revenues,
which would adversely impact their financial position. Any additional terrorist
attacks or any military or economic responses by the United States may further
increase airline costs and cause further declines in air travel demand.
These conditions, particularly should they continue, may affect the lessees'
ability to make rent and other lease payments, may impair the ability of LIFT to
re-lease aircraft on a timely basis and at favorable rates and may reduce the
value of the aircraft for possible sale. These factors can have an adverse
effect on LIFT's ability to pay the notes on a timely basis and in full.
BECAUSE LIFT IS A NEW ENTITY, IT HAS NO ESTABLISHED OPERATING HISTORY OR
HISTORICAL FINANCIAL STATEMENTS FOR YOU TO RELY ON IN MAKING AN INVESTMENT
DECISION. THIS MAKES YOUR ASSESSMENT OF ITS PROSPECTS AND MANAGEMENT MORE
DIFFICULT.
In the absence of an operating history and historical financial statements
for LIFT and its subsidiaries, it will be more difficult for you to evaluate
LIFT's likely future performance based on past experience than it would be were
such information available. Likewise, it will be more difficult for you to
assess the quality of its management.
THE PRINCIPAL PAYMENTS YOU WILL RECEIVE EACH MONTH WILL VARY DEPENDING ON
LIFT'S REVENUES AND EXPENSES FOR THE PREVIOUS MONTH. SINCE THESE AMOUNTS ARE NOT
PRECISELY PREDICTABLE, YOUR MONTHLY PRINCIPAL PAYMENTS WILL ALSO BE
UNPREDICTABLE.
Because principal payments on the notes on any payment date are a function
of the revenues and expenses of the previous month, principal payments will be
particularly sensitive to variations in collections and expenses. Although LIFT
has determined an expected schedule of installments based on revenue
assumptions, actual payments will be different, and may differ materially, from
those assumed as revenues and expenses are affected by general economic
conditions and factors such as:
(1) changes in the mix of the aircraft portfolio that will change the
mix of lessees and the values of aircraft as a result of the loss, substitution,
non-delivery, sale or purchase of aircraft;
(2) the possible mismatch between the mix of fixed and floating rates on
the notes and mix of fixed and floating rates on aircraft leases;
(3) costs involved in terminating interest rate hedge arrangements;
(4) reduced revenues from credit problems facing lessees and lease
defaults as a result of competition, weak financial condition and local economic
conditions;
(5) aging of the aircraft portfolio or changes in the relative value or
marketability of the aircraft portfolio resulting in reduced values and lease
rates and the resulting need to lease to less creditworthy entities, and the
inability to collect or enforce lease payments;
(6) increased costs resulting from the enforcement of defaulted leases;
(7) increased maintenance, registration and other operating costs
resulting from new governmental regulations, the failure of a lessee to perform
its obligations or, the aging of aircraft;
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<Page>
(8) possible reduced lease rates and lower sale proceeds than appraised
values as the current leases expire;
(9) non-reimbursed or non-reimbursable withholding and other taxes or
charges that reduce revenues; and
(10) the possible inability to re-lease or sell aircraft that are
currently off-lease or as the current leases expire. As of the date of this
prospectus, one aircraft representing 1.05% of the aggregate initial appraised
value was off-lease.
LIFT HAS NO EMPLOYEES OR MANAGERS OF ITS OWN, AND SO ITS ABILITY TO GENERATE
REVENUES TO PAY THE NOTES DEPENDS ON CONTRACTS WITH, AND PERFORMANCE BY,
INDEPENDENT THIRD PARTY SERVICE PROVIDERS.
LIFT is especially dependent on service providers because neither LIFT nor
its subsidiaries will have any employees or executive managers of its own.
Inadequate performance and resignations by service providers may materially
and adversely affect revenues and costs and thereby the timing of note payments
and ultimate repayment. In the absence of an ownership stake, third party
service providers may have no incentive to perform beyond the strict
requirements of their contract.
LIFT will rely on contracts with GE Capital Aviation Services, Limited as
the servicer, Phoenix American Financial Services, Inc. as the administrative
agent, Credit Suisse First Boston as the capital markets advisor and the
financial advisor and perhaps other service providers for all asset servicing,
executive and administrative functions. Regarding these arrangements, please
note that:
(1) any of these organizations may fail to perform its contractual
obligations adequately;
(2) any of them may exercise contract termination rights;
(3) LIFT may find it difficult to recover damages from any of these
third parties for poor performance in light of contractual limitations;
(4) LIFT may not be able to terminate the contract itself and in
particular its rights to terminate the servicing agreement are very limited; and
(5) LIFT may not have the legal right to locate satisfactory
replacements on favorable terms.
THE AIRCRAFT SERVICER MAY FACE CONFLICTS OF INTEREST THAT COULD RESULT IN
PREFERENTIAL TREATMENT FOR A THIRD PARTY AT THE EXPENSE OF THE AIRCRAFT OF LIFT.
IF THE SERVICER DID PREFER A THIRD PARTY IN A CONFLICT OF INTEREST, IT COULD
REDUCE LIFT'S REVENUES AND ADVERSELY AFFECT THE TIMELY OR FULL REPAYMENT OF YOUR
NOTES.
GE Capital Aviation Services, Limited will from time to time have conflicts
of interest that may adversely affect its ability to perform its obligations as
the servicer to LIFT because it manages aircraft and other assets of many other
entities, in particular for its affiliate, General Electric Capital Corporation
and its group. These conflicts will arise when LIFT aircraft are leased to
entities that are also the lessees of other aircraft managed by the servicer and
decisions affecting some aircraft may be adverse to others. If the servicer
makes a decision adverse to LIFT's interests, LIFT's revenues could suffer.
These conflicts may be particularly acute when a lessee in financial
distress needs to return some of its aircraft. Conflicts will also arise when
the aircraft of LIFT are being marketed for re-lease or sale at a time when
other aircraft managed by the servicer are similarly being marketed. These
circumstances may be especially sensitive where General Electric Capital
Corporation is providing financing for the marketed aircraft or where the
servicer's contractual arrangements have the effect of requiring preferential
treatment for other aircraft.
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Under the terms of its servicing agreement with the servicer, LIFT is not
necessarily entitled to be informed of all conflicts of interest involving the
servicer and is limited in its right to replace the servicer because of
conflicts of interest.
BECAUSE LIFT'S CONTRACT LIMITS ITS REMEDIES AGAINST THE SERVICER FOR POOR
PERFORMANCE, LIFT MAY AT SOME POINT BEAR COSTS THAT WILL REDUCE ITS AVAILABLE
REVENUES AND ADVERSELY AFFECT THE TIMELY OR FULL REPAYMENT OF YOUR NOTES.
Under the servicing agreement, LIFT may not in many cases have the right to
recover damages from the servicer for inadequate performance. Further, LIFT's
right to terminate the servicing agreement by reason of a failure of the
servicer to perform is limited to those failures to perform that materially and
adversely affect LIFT and its subsidiaries as a whole.
In addition, the servicer is in particular not contractually responsible
for:
(1) the transfer of aircraft, leases or other assets to any person
within LIFT and its subsidiaries;
(2) determining the adequacy of the terms of any aircraft lease,
including rent payments, maintenance reserves or security deposits;
(3) determining the reliability or creditworthiness of any lessee; and
(4) complying with the terms of the notes and the ability of LIFT to
comply with the terms of the notes.
LIFT has agreed to indemnify the servicer and its affiliates for broad
categories of losses arising out of the performance of services for the aircraft
and leases held by subsidiaries of LIFT unless the losses arise from the
servicer's gross negligence or willful misconduct. LIFT also agreed to indemnify
the servicer and its affiliates as to losses arising out of the exchange offer
and the disclosures in this prospectus, except disclosures as provided by the
servicer.
YOU WILL NOT HAVE ANY LIEN OR SIMILAR INTEREST IN THE AIRCRAFT AND MAY
RECOVER LESS UPON DEFAULT THAN IF A LIEN WERE AVAILABLE.
The security trustee will not on your behalf have available the broader
category of protection, such as priority over competing liens, and enforcement
rights upon default, such as seizing the aircraft, that would have been
available in some jurisdictions with a lien on the aircraft. Although the
aircraft leases and the ownership interest in LIFT subsidiaries that own the
aircraft have been or will be pledged to the security trustee for your benefit,
the amount recoverable as to the aircraft may be less in the absence of a direct
lien on the aircraft.
THE NOTES ARE NOT ALL ENTITLED TO THE SAME PAYMENT PRIORITY. A REVENUE
SHORTFALL WILL AFFECT THE MORE JUNIOR CLASSES OF NOTES BEFORE IT AFFECTS THE
MORE SENIOR CLASSES.
Any cash flow shortfall will more directly affect claimants with a lower
payment priority. This effect will be more pronounced after acceleration of the
notes upon any bankruptcy of LIFT or other defaults when the order of payment
priorities would be changed to favor the senior classes of notes to a greater
degree.
IF THE VALUE OF LIFT'S AIRCRAFT DECLINES, THE PRINCIPAL PAYMENTS TO THE MOST
SENIOR CLASS OF NOTES WILL BE ACCELERATED, AND THIS MAY EXTEND THE TIMING OF AND
AFFECT THE AMOUNT OF REPAYMENT FOR THE MORE JUNIOR CLASSES OF NOTES.
The principal payment amounts payable on the Class A Notes will be made more
quickly if the appraisals of the aircraft that LIFT is to obtain at least
annually reflect a decline in aircraft values that is significantly greater than
expected. These accelerated principal payments on the Class A Notes may have the
effect of suspending principal payments on more junior notes and extending the
weighted average lives of those junior notes. You should note that aircraft
appraisers have recently been reducing their appraised values for aircraft,
reflecting the supply effects of new aircraft orders, manufacturers'
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price discounting and other factors. Accordingly, LIFT cannot assure you that
the expected average lives of its more junior notes will not be materially
extended and that the repayment for the more junior notes will not be adversely
affected.
THE JUNIOR CLASSES OF NOTES WILL NOT BE ABLE TO DIRECT THE EXERCISE OF
REMEDIES UNTIL THE SENIOR CLASSES HAVE BEEN PAID IN FULL AND MAY BE ADVERSELY
AFFECTED BY DECISIONS OF THE SENIOR CLASSES.
Upon default, only the holders of the senior-most class of notes still
outstanding, determined in alphabetical order, and in limited instances the
provider of any future senior credit facility will be able to direct the trustee
and the security trustee as to the exercise of remedies against LIFT and the
collateral. The holders of the other classes of notes will not be able to give
any direction of that type. In giving directions regarding the exercise of
remedies, the holders of the senior class are entitled to consider their own
interests without regard to the interests of the other classes.
BECAUSE AN ACTIVE TRADING MARKET FOR THE EXCHANGE NOTES MAY NEVER DEVELOP,
IT MAY BE DIFFICULT FOR YOU TO RESELL YOUR NOTES EVEN AFTER REGISTRATION.
Although those holders of exchange notes who are not LIFT's "affiliates"
under the Securities Act may resell exchange notes without registration under
the Securities Act, there is no existing market for the exchange notes. LIFT
cannot assure you as to the liquidity of any markets that may develop for the
exchange notes, your ability to sell exchange notes or the prices at which you
would be able to sell exchange notes. Future trading prices of the exchange
notes will depend on many factors, such as prevailing interest rates, LIFT's
operating results, the market for similar securities and the liquidity of any
market that may develop for the exchange notes.
The initial purchasers in the private offering of the notes have advised
LIFT that they intend to make a market in the exchange notes after the exchange
offer. They are not, however, obligated to do so, and they may discontinue any
market making at any time without notice. In addition, market-making activity
may be limited during the exchange offer.
IF YOU DO NOT EXCHANGE YOUR NOTES, THE RESALE OF YOUR EXISTING NOTES WILL
CONTINUE TO BE HIGHLY RESTRICTED.
If you do not exchange your current Class A, Class B or Class C Notes for
exchange notes in the exchange offer, you will continue to be subject to
existing transfer restrictions after the exchange offer. LIFT issued the notes
in a private offering exempt from the registration requirements of the
Securities Act. Therefore, you may not offer or sell your current notes except
in compliance with the registration or qualification requirements of the
Securities Act and applicable state securities laws or pursuant to exceptions
from, or in transactions not subject to, those requirements.
In addition, if you do not tender your current notes in the exchange offer,
you will no longer be entitled to any registration rights after the exchange
offer unless you are legally precluded from participating in the exchange offer.
To the extent that your notes are not tendered and accepted in the exchange
offer, any trading liquidity for untendered notes could be adversely affected.
IF THE NOTES ARE SUBJECTED TO WITHHOLDING TAXES, YOU WILL RECEIVE LESS THAN
THE NET AMOUNT OF INTEREST PAYABLE ON THE NOTES.
LIFT will not make any additional payments to you if any withholding or
deduction on the notes is required to be made by law. If any withholding or
deduction is required, LIFT will attempt to avoid the withholding or deduction
and may redeem the notes. If any withholding taxes are imposed and LIFT does not
redeem the notes, the amount of interest received by you will be reduced by the
amount of the taxes.
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FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
the securities laws. All statements regarding LIFT's expected financial
position, business and financing plans are forward-looking statements.
Forward-looking statements also include representations of LIFT's expectations
or beliefs concerning future events that involve risks and uncertainties,
including those associated with:
(1) the aircraft;
(2) the leases for the aircraft;
(3) the lessees of the aircraft;
(4) the prospects of re-leasing or disposing of the aircraft;
(5) lessee concentrations;
(6) any future acquisition of aircraft;
(7) LIFT's ability to pay interest, principal and premium on the notes;
and
(8) risks relating to tax withholding.
The expectations reflected in those forward-looking statements may prove to be
incorrect. Important factors that could cause actual results to differ
materially from those expectations have been disclosed by LIFT in this
prospectus under "Risk Factors". All subsequent written and oral forward-looking
statements attributable to LIFT or persons acting on its behalf are expressly
qualified by the cautionary statements included in this prospectus.
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USE OF PROCEEDS OF THE EXCHANGE NOTES
The exchange offer is intended to satisfy a number of LIFT's obligations to
the initial purchasers of the Class A, Class B and Class C Notes. LIFT will not
receive any proceeds from the issuance of the exchange notes offered under this
prospectus.
In consideration for issuing the exchange notes, LIFT will receive, in
exchange, originally issued notes in like principal amount. The form and terms
of the exchange notes are identical in all material respects to the form and
terms of the initial notes of the same class, except as otherwise described
under "The Exchange Offer--Terms of the Exchange Offer." Notes surrendered in
exchange for the exchange notes will be retired and cancelled and cannot be
reissued. Accordingly, the issuance of the exchange notes will not result in any
increase in LIFT's outstanding debt.
The net cash proceeds to LIFT from the initial offering of its notes were
approximately $1,412.9 million after reduction for original issue discount of
$16.1 million but before payment of subscription discounts and commissions to
and expenses of the initial purchasers of the notes in the amount of
approximately $9.3 million. LIFT used the net proceeds to it to pay to Automatic
the $5.5 million cost portion of the purchase price for LIFT 1, to repay in full
the indebtedness under the bridge notes incurred by LIFT 1 to acquire the 39
aircraft from General Electric Capital Corporation and its affiliates in the
amount of $1,310.5 million, to fund a cash reserve in the amount of
$83.0 million and to pay additional expenses of $4.6 million.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
LIFT initially sold the Class A, Class B and Class C Notes in a private
offering on June 26, 2001 to Credit Suisse First Boston Corporation, Lehman
Brothers Inc. and Salomon Smith Barney Inc., referred to as the initial
purchasers in this prospectus, pursuant to a purchase agreement dated June 13,
2001 between it and Credit Suisse First Boston Corporation, as the
representative of the initial purchasers. Those initial notes are referred to as
the "Restricted Notes". The initial purchasers subsequently resold the
Restricted Notes to qualified institutional buyers in the United States in
reliance on, and subject to the restrictions of, Rule 144A under the Securities
Act and outside the United States in accordance with Regulation S under the
Securities Act. The initial Class D Notes were part of the same private offering
but are not subject to the exchange offer.
In connection with the private offering of the Restricted Notes, LIFT and
the initial purchasers entered into a registration rights agreement dated
June 26, 2001, in which LIFT agreed, among other things:
(1) to file with the SEC as soon as practicable, a registration
statement relating to an exchange offer for the Restricted Notes;
(2) to use all commercially reasonable efforts to cause that
registration statement to be declared effective under the Securities Act at the
earliest possible time;
(3) upon the effectiveness of that registration statement, to offer the
holders of the Restricted Notes the opportunity to exchange their Restricted
Notes in the exchange offer for a like principal amount of exchange notes;
(4) to keep the exchange offer open for not less than 20 business days
or longer, if required by applicable law, after that registration statement is
declared effective;
(5) to use all commercially reasonable efforts to consummate the
exchange offer on the earliest practicable date after that registration
statement has become effective, but in no event later than 30 business days
after effectiveness; and
(6) to use all commercially reasonable efforts to consummate the
exchange offer on or before March 23, 2002.
LIFT also agreed that where applicable law or SEC policy makes the exchange
offer itself, or the participation in the exchange offer by one or more holders
of the Restricted Notes, impermissible or impossible, it would:
(1) use its best efforts to file a shelf registration statement relating
to the offer and sale of the Restricted Notes by the holders of the Restricted
Notes;
(2) use its best efforts to cause the shelf registration statement to be
declared effective within 270 days after the obligation to file one arises; and
(3) use its best efforts to keep the shelf registration statement
effective for at least two years, as may be extended under the registration
rights agreement, or until the Restricted Notes covered by the shelf
registration statement have been sold or until the Restricted Notes become
eligible for resale without volume restrictions pursuant to Rule 144 under the
Securities Act.
The exchange offer made by this prospectus is intended to satisfy your
registration rights under the registration rights agreement. If LIFT fails to
fulfill its registration and exchange obligations, you, as a holder of
outstanding Restricted Notes, are entitled to receive additional interest at a
rate of 0.50% per annum.
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Restricted Notes that are not tendered for exchange in the exchange offer
will remain outstanding and continue to accrue interest and will be entitled to
the rights and benefits that holders of Restricted Notes have under the
indenture governing the notes. No holder of Restricted Notes will be entitled to
receive any additional interest as noted in the prior paragraph on its
Restricted Notes, if that holder was, at any time while the exchange offer is
pending, eligible to exchange, and did not validly tender, its Restricted Notes
for exchange notes in the exchange offer.
The foregoing is a summary of the material terms of the registration rights
agreement. For a comprehensive understanding of your registration rights, you
should refer to the registration rights agreement, which is included as
Exhibit 4.4 to the Registration Statement that relates to this prospectus.
RESALE OF EXCHANGE NOTES
Based on no-action letters issued by the staff of the SEC in unrelated
transactions, LIFT believes that you may offer for resale, resell or otherwise
transfer any exchange notes issued to you in the exchange offer in exchange for
Restricted Notes without compliance with the registration and prospectus
delivery requirements of the Securities Act, if
(1) you are acquiring the exchange notes issued in the exchange offer in
the ordinary course of your business;
(2) you are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate, in a distribution
of the exchange notes;
(3) you are not an "affiliate" of LIFT, as that term is defined in
Rule 405 under the Securities Act; and
(4) you are not an initial purchaser who is holding exchange notes you
received in exchange for Restricted Notes acquired directly from LIFT in the
initial offering.
If you are an "affiliate" of LIFT or an initial purchaser described above or
if you have any arrangement or understanding with any person to participate in a
distribution of the exchange notes
(1) you will not be able to rely on the interpretations of the staff of
the SEC in connection with any offer for resale, resale or other transfer of
exchange notes; and
(2) you must comply with the registration and prospectus delivery
requirements of the Securities Act, or have an exemption available to you, in
connection with any offer for resale, resale or other transfer of the exchange
notes. This prospectus may be used for an offer for sale, resale or other
transfer of the exchange notes only as specifically set forth in this
prospectus.
In addition, LIFT is not making the exchange offer to, nor will it accept
surrenders of Restricted Notes from, holders of Restricted Notes in any state in
which the exchange offer would not comply with the applicable securities laws or
"blue sky" laws of that state.
Each broker-dealer that receives exchange notes for its own account in
exchange for Restricted Notes, where Restricted Notes were acquired by the
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of exchange notes. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
On the terms and conditions set forth in this prospectus and in the
accompanying letter of transmittal, LIFT will accept all outstanding Restricted
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time,
on the Expiration Date, which is defined below in "--Expiration Date;
Extensions; Amendments". After authentication of the exchange notes by the
trustee or an
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authenticating agent, LIFT will issue and deliver $1,000 principal amount of
exchange notes in exchange for each $1,000 principal amount of outstanding
Restricted Notes accepted in the exchange offer. You may tender some or all of
your Restricted Notes pursuant to the exchange offer, but only in integral
multiples of $1,000.
By tendering Restricted Notes in exchange for exchange notes and by
executing the letter of transmittal, you will be representing to LIFT that,
among other things
(1) any exchange notes to be received by you will be acquired in the
ordinary course of your business;
(2) you are not engaging in a distribution nor do you have an
arrangement or understanding with any person to participate in the distribution
of the exchange notes; and
(3) you are not an "affiliate" of LIFT, as defined in Rule 405 under the
Securities Act, or, if you are an affiliate, that you will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
IN THE CASE OF A BROKER-DEALER THAT RECEIVES EXCHANGE NOTES FOR ITS OWN
ACCOUNT IN EXCHANGE FOR RESTRICTED NOTES THAT WERE ACQUIRED BY IT AS A RESULT OF
MARKET-MAKING OR OTHER TRADING ACTIVITIES, THE LETTER OF TRANSMITTAL WILL ALSO
INCLUDE AN ACKNOWLEDGMENT THAT THE BROKER-DEALER WILL DELIVER A COPY OF THIS
PROSPECTUS IN CONNECTION WITH THE RESALE BY IT OF EXCHANGE NOTES RECEIVED
PURSUANT TO THE EXCHANGE OFFER; HOWEVER, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, THE BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT. SEE "PLAN OF
DISTRIBUTION".
The exchange notes will be issued under and entitled to the benefits of the
indenture that governs the Restricted Notes. The form and terms of the exchange
notes are identical in all material respects to the form and terms of the
outstanding Restricted Notes, except that
(1) the offering of the exchange notes has been registered under the
Securities Act;
(2) the exchange notes will not be subject to transfer restrictions; and
(3) the exchange notes will be issued without registration rights.
As of the date of this prospectus, approximately $ aggregate
principal amount of the Restricted Notes is outstanding. In connection with the
issuance of the Restricted Notes, LIFT arranged for the Restricted Notes to be
issued and transferable in book-entry form through the facilities of The
Depository Trust Company, acting as a depositary. The exchange notes will also
be available and transferable in book-entry form through DTC.
This prospectus and the accompanying letter of transmittal are initially
being sent to all registered holders of Restricted Notes as of the close of
business on , 2001. There will be no fixed record date for determining
registered holders of Restricted Notes entitled to participate in the exchange
offer. The exchange offer is not conditioned upon the tender of any minimum
aggregate principal amount of Restricted Notes. The exchange offer is, however,
subject to customary conditions, which may be waived by LIFT, and to the terms
and provisions of the registration rights agreement. See "--Conditions to the
Exchange Offer."
LIFT will be deemed to have accepted validly tendered Restricted Notes when
and if it has given oral or written notice to the exchange agent. See
"--Exchange Agent." The exchange agent will act as agent for the tendering
holders of Restricted Notes for the purpose of receiving exchange notes from
LIFT and delivering exchange notes to those holders.
If any tendered Restricted Notes are not accepted for exchange because of an
invalid tender or the occurrence of other events set forth in this section,
certificates for any of the unaccepted Restricted
20
<Page>
Notes will be returned, at the expense of LIFT, to the tendering holder as
promptly as practicable after the Expiration Date.
Holders who tender Restricted Notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
Restricted Notes pursuant to the exchange offer. LIFT will pay all charges and
expenses, other than specified applicable taxes, in connection with the exchange
offer. See "--Solicitation of Tenders, Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on ,
2002, or the latest date to which LIFT extends the exchange offer. LIFT may
extend the exchange offer at any time and from time to time, in its sole
discretion, by giving oral or written notice to the exchange agent and by timely
public announcement.
If any of the conditions set forth under "--Conditions of the Exchange
Offer" has occurred and has not been waived by LIFT, LIFT expressly reserves the
right, in its sole discretion, by giving oral or written notice to the exchange
agent, to
(1) extend the exchange offer or delay accepting any Restricted Notes;
(2) amend the terms of the exchange offer; or
(3) terminate the exchange offer and return any tendered notes.
Any delay in accepting any Restricted Note and any extension, amendment or
termination of the exchange offer will be followed as promptly as practicable by
oral or written notice to the registered holders of the Restricted Notes. If
LIFT amends the exchange offer in a manner that it determines to constitute a
material change, LIFT will promptly disclose the amendment in a manner
reasonably calculated to inform the holders of the amendment, and LIFT will
extend the exchange offer to the extent required by law.
Without limiting the manner in which it may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, LIFT is not obligated to publish, advise, or otherwise
communicate any public announcement, other than by making a timely press
release.
INTEREST ON THE EXCHANGE NOTES
Interest on the exchange notes will accrue from the last interest payment
date on which interest was paid on the Restricted Notes that are surrendered in
exchange or, if no interest has been paid on the Restricted Notes, from
June 26, 2001. The rate of and payment date for interest on the exchange notes
will be the same as that of the related Restricted Note.
PROCEDURES FOR TENDERING
BOOK-ENTRY INTERESTS. The Restricted Notes were issued as global securities
in fully registered form without interest coupons. Beneficial interests in the
global securities held by direct or indirect participants in DTC are shown on,
and transfers of these interests are effected only through, records maintained
in book-entry form by DTC with respect to its participants.
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<Page>
If you hold your Restricted Notes in the form of book-entry interests and
you wish to tender your Restricted Notes for exchange in the exchange offer, you
must transmit to the exchange agent on or prior to the Expiration Date either:
(1) a written or facsimile copy of a properly completed and duly
executed letter of transmittal, including all other documents required by such
letter of transmittal, to the exchange agent at the address set forth on the
cover page of the letter of transmittal; or
(2) a computer-generated message, or Agent's Message, transmitted by
means of DTC's Automated Tender Offer Program, or ATOP, system and received by
the exchange agent and forming a part of a confirmation of book-entry transfer,
in which you acknowledge and agree to be bound by the terms of the letter of
transmittal.
In addition, in order to deliver Restricted Notes held in the form of
book-entry interests (1) a timely confirmation of book-entry transfer of those
notes into the exchange agent's account at DTC pursuant to the procedure for
book-entry transfers described below under "--Book-Entry Transfer" must be
received by the exchange agent prior to the Expiration Date; or (2) you must
comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF RESTRICTED NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, LIFT RECOMMENDS THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT SEND
THE LETTER OF TRANSMITTAL OR RESTRICTED NOTES TO LIFT OR DTC. YOU MAY REQUEST
YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY, OR NOMINEE TO EFFECT THE
ABOVE TRANSACTIONS FOR YOU.
CERTIFICATED RESTRICTED NOTES. Only registered holders of certificated
Restricted Notes may tender those notes in the exchange offer. Certificated
notes are notes held in physical, as opposed to book-entry, form. If your
Restricted Notes are certificated notes and you wish to tender those notes for
exchange in the exchange offer, you must transmit to the exchange agent on or
prior to the Expiration Date, a written or facsimile copy of a properly
completed and duly executed letter of transmittal, including all other required
documents, to the address set forth below under "--Exchange Agent." In addition,
in order to validly tender your certificated Restricted Notes:
(1) the certificates representing your Restricted Notes must be received
by the exchange agent prior to the Expiration Date or
(2) you must comply with the guaranteed delivery procedures described
below.
PROCEDURES APPLICABLE TO ALL HOLDERS. If you tender a Restricted Note and
you do not withdraw the tender prior to the Expiration Date, you will have made
an agreement with LIFT in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of transmittal.
If your Restricted Notes are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and you wish to tender your
notes, you should contact the registered holder promptly and instruct the
registered holder to tender on your behalf. If you wish to tender on your own
behalf, you must, prior to completing and executing the letter of transmittal
and delivering your Restricted Notes, either make appropriate arrangements to
register ownership of the Restricted Notes in your name or obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
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<Page>
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by an eligible institution unless:
(1) Restricted Notes tendered in the exchange offer are tendered either
(a) by a registered holder who has not completed the box entitled
"Special Registration Instructions" or "Special Delivery Instructions" on the
letter of transmittal or
(b) for the account of an eligible institution; and
(2) the box entitled "Special Registration Instructions" on the letter
of transmittal has not been completed.
If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantee must be by a financial institution,
which includes most banks, savings and loan associations and brokerage houses,
that is a participant in the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Program or the Stock Exchanges Medallion
Program.
If the letter of transmittal is signed by a person other than you, your
Restricted Notes must be endorsed or accompanied by a properly completed bond
power and signed by you as your name appears on those Restricted Notes.
If the letter of transmittal or any Restricted Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless LIFT waives this
requirement, in this instance you must submit with the letter of transmittal
proper evidence satisfactory to LIFT of their authority to act on your behalf.
In addition, LIFT reserves the right in its sole discretion to:
(1) purchase or make offers for, or offer registered notes for, any
Restricted Notes that remain outstanding subsequent to the expiration of the
exchange offer; or
(2) to the extent permitted by applicable law, purchase notes in the
open market, in privately negotiated transactions or otherwise.
The terms of any of these purchases or offers could differ from the terms of
the exchange offer.
In all cases, LIFT will issue registered notes for Restricted Notes that are
accepted for exchange in the exchange offer after timely receipt by the exchange
agent of certificates for your Restricted Notes or a timely book-entry
confirmation of your Restricted Notes into the exchange agent's account at DTC,
a properly completed and duly executed letter of transmittal, or a
computer-generated message instead of the letter of transmittal, and all other
required documents. If any tendered Restricted Notes are not accepted for any
reason set forth in the terms and conditions of the exchange offer or if
Restricted Notes are submitted for a greater principal amount than you desire to
exchange and you withdraw tender of such Restricted Notes you do not desire to
exchange, those or substitute Restricted Notes will be returned without expense
to you. In addition, in the case of Restricted Notes tendered by book-entry
transfer into the exchange agent's account at DTC pursuant to the book-entry
transfer procedures described below, the unexchanged Restricted Notes will be
credited to your account maintained with DTC, as promptly as practicable after
the expiration or termination of the exchange offer.
LIFT will determine, in its sole discretion, all questions regarding the
validity, form, eligibility, time of receipt, acceptance of tendered Restricted
Notes and withdrawal of tendered Restricted Notes, and that determination will
be final and binding on all parties. LIFT reserves the absolute right to reject
any and all Restricted Notes not properly tendered or to refuse to accept any
Restricted Notes that would, in the opinion of counsel to LIFT, be unlawful.
LIFT also reserves the right to waive, in its sole
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<Page>
discretion, any defects, irregularities or conditions of tender as to any
particular Restricted Note. LIFT's interpretation of the terms and conditions of
the exchange offer and the instructions in the letter of transmittal will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Restricted Notes must be cured within such time as
LIFT may determine. Although LIFT intends to notify any affected holder of
defects or irregularities in the tender of Restricted Notes, none of LIFT, the
exchange agent, the trustee or any other person undertakes any liability for any
failure to give that notice. Tenders of Restricted Notes will not be deemed to
have been properly made until these defects or irregularities have been cured or
waived.
Any Restricted Notes received by the exchange agent that LIFT determines are
not properly tendered or the tender of which is otherwise rejected by it and as
to which the defects or irregularities have not been cured or waived by it will
be returned by the exchange agent to the tendering holder unless otherwise
provided in the letter of transmittal, as soon as practicable following the
Expiration Date.
LIFT will execute, and the trustee will authenticate and deliver to the
surrendering holder of Restricted Notes, exchange notes in the same aggregate
principal amount as the Restricted Notes so surrendered and then outstanding as
promptly as practicable following the Expiration Date whenever any Restricted
Notes are validly tendered for exchange and accepted by LIFT. If any Restricted
Notes tendered are paid down prior to the consummation of the exchange offer,
the principal amount of Restricted Notes exchanged will be the amount of those
notes tendered that are then outstanding.
GUARANTEED DELIVERY PROCEDURES. If you desire to tender your Restricted
Notes and your Restricted Notes are not immediately available or one of the
situations described in "--Book-Entry Transfer" occurs, you may tender if:
(1) you tender through an eligible financial institution;
(2) on or prior to 5:00 p.m., New York City time, on the Expiration
Date, the exchange agent receives from an eligible institution, a written or
facsimile copy of a properly completed and duly executed notice of guaranteed
delivery, substantially in the form provided by LIFT; and
(3) the certificates for all certificated Restricted Notes, in proper
form for transfer, or a book-entry confirmation, and all other documents
required by the letter of transmittal, are received by the exchange agent within
three New York Stock Exchange trading days after the date of execution of the
notice of guaranteed delivery.
The notice of guaranteed delivery may be sent by facsimile transmission,
mail or hand delivery. The notice of guaranteed delivery must set forth:
(1) your name and address;
(2) the amount of Restricted Notes you are tendering; and
(3) a statement that your tender is being made by the notice of
guaranteed delivery and that you guarantee that within three New York Stock
Exchange trading days after the execution of the notice of guaranteed delivery,
the eligible institution will deliver the following documents to the exchange
agent:
(a) the certificates for all certificated Restricted Notes being
tendered, in proper form for transfer or a book-entry confirmation of tender;
(b) a written or facsimile copy of the letter of transmittal, or a
book-entry confirmation instead of the letter of transmittal; and
(c) any other documents required by the letter of transmittal.
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BOOK-ENTRY TRANSFER. The exchange agent will establish an account with
respect to the book-entry interests at DTC for purposes of the exchange offer
promptly after the date of this prospectus. You must deliver your book-entry
interest by book-entry transfer to the account maintained by the exchange agent
at DTC. Any financial institution that is a participant in DTC's systems may
make book-entry delivery of book-entry interests by causing DTC to transfer the
book-entry interests into the exchange agent's account at DTC in accordance with
DTC's procedures for transfer.
If you cannot deliver a book-entry confirmation of book-entry delivery of
your book-entry interests into the exchange agent's account at DTC, or you
cannot deliver all other documents required by the letter of transmittal to the
exchange agent prior to the Expiration Date, then you must tender your
book-entry interests according to the guaranteed delivery procedures discussed
above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw tenders of
Restricted Notes at any time prior to 5:00 p.m., New York City time, on the
Expiration Date.
For a withdrawal to be effective, the exchange agent must receive a written
or facsimile transmission notice of withdrawal at its address set forth below
under "--Exchange Agent" at any time prior to 5:00 p.m., New York City time, on
the Expiration Date.
In any notice of withdrawal, you must
(1) specify your name in the same manner as when you deposited the
Restricted Notes to be withdrawn;
(2) identify the Restricted Notes to be withdrawn, including the
principal amount of the Restricted Notes of each series, as applicable, and the
name and number of the account at DTC to be credited;
(3) sign electronically in the same manner as your original signature on
the letter of transmittal by which your Restricted Notes were tendered or be
accompanied by documents of transfer sufficient to permit the registrar to
register the transfer of the Restricted Notes into your name; and
(4) specify the name in which you want any Restricted Notes to be
registered, if not your own.
All questions as to the validity, form, eligibility and time of receipt of
any withdrawal notices will be determined by LIFT in its sole discretion and its
determination will be final and binding on all parties. Any Restricted Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
exchange offer, and no exchange notes will be issued in exchange for them unless
the Restricted Notes so withdrawn are validly retendered. Any Restricted Notes
that have been tendered but are validly withdrawn will be returned to the
relevant holder without cost to that holder as soon as practicable after
withdrawal. Properly withdrawn Restricted Notes may be retendered by following
one of the procedures described above under "--Procedures for Tendering" at any
time prior to the Expiration Date.
CONDITIONS OF THE EXCHANGE OFFER
LIFT is not required to accept for exchange, or to exchange notes for, any
Restricted Notes, and may terminate or amend the exchange offer before the
acceptance of any Restricted Notes, if, in its judgment, any of the following
conditions has occurred or has not been satisfied:
(1) the exchange offer, or the making of any exchange by a holder of
Restricted Notes, violates applicable interpretations of the SEC staff;
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(2) any action or proceeding is instituted or threatened in any court or
by or before any governmental body with respect to the exchange offer;
(3) there is adopted or enacted any law, rule or regulation that LIFT
expects to impair its ability to proceed with the exchange offer; or
(4) any governmental approval that LIFT, in its sole discretion, deems
necessary for the exchange offer is not obtained.
If LIFT determines to terminate the exchange offer for any of the reasons
set forth above, it will refuse to accept any Restricted Notes and return any
Restricted Notes that have been tendered; alternatively, if LIFT determines not
to terminate the exchange offer despite the existence of any of the reasons set
forth above, it may extend or otherwise amend the exchange offer, delay
accepting any tendered Restricted Note and retain all Restricted Notes tendered
prior to the Expiration Date of the exchange offer, subject to the rights of the
holders of the tendered Restricted Notes to withdraw the Restricted Notes. LIFT
may, in its discretion, waive any rule or condition and proceed with the
exchange offer. If LIFT determines that a waiver constitutes a material change
in the exchange offer, LIFT will promptly disclose that change.
In addition, LIFT will not accept for exchange any Restricted Notes
tendered, and no exchange notes will be issued in exchange for the Restricted
Notes, if at that time any stop order is threatened or in effect with respect to
either the Registration Statement of which this prospectus is a part or the
qualification of the indenture governing the Note under the Trust Indenture Act
of 1939.
The specified conditions are for the sole benefit of LIFT, and it may assert
any of the conditions regardless of the circumstances giving rise to any
condition or may waive the condition in whole or in part at any time and from
time to time in its sole discretion. LIFT's failure at any time to exercise any
of these rights is not to be deemed a waiver of any right, and each right is an
ongoing right that may be asserted at any time and from time to time.
EXCHANGE AGENT
Bankers Trust, the trustee under the indenture governing the notes, has been
appointed as the exchange agent for the exchange offer. In its capacity as the
exchange agent, Bankers Trust has no fiduciary duties and will be acting solely
on directions from LIFT. Requests for assistance and requests for additional
copies of this prospectus or of the letter of transmittal should be directed to
the exchange agent addressed as follows:
<Table>
By Mail, Overnight Delivery or BT Services Tennessee Incorporated
Hand Delivery: Corporate Trust and Agency Group
648 Grassmere Park Road
Nashville, Tennessee 37211
Facsimile Transmission: (615) 835-3701
Information or Confirmation by (800) 735-7777
Telephone:
</Table>
Delivery to an address or facsimile number other than those listed above
will not constitute a valid delivery.
SOLICITATION OF TENDERS; FEES AND EXPENSES
LIFT will bear all expenses of soliciting tenders pursuant to the exchange
offer. The principal solicitation pursuant to the exchange offer is being made
by mail. Additional solicitations may be made
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by Phoenix American Financial Services, Inc., the administrative agent, or by
LIFT in person, by telegraph, telephone or facsimile transmission.
LIFT has not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. LIFT will, however, pay the
exchange agent reasonable and customary fees for its services and will reimburse
the exchange agent for its reasonable out-of-pocket costs and expenses and will
indemnify the exchange agent for all losses and claims incurred by it as a
result of the exchange offer. LIFT will also pay the administrative agent its
ongoing fees and expenses. LIFT may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this prospectus, letters of transmittal
and related documents to the beneficial owners of the Restricted Notes and in
handling or forwarding tenders for exchange.
LIFT will also pay all other expenses incurred by it in connection with the
exchange offer, including accounting and legal fees and printing costs. In
addition, LIFT has agreed to indemnify its accountants for any claims,
liabilities and expenses incurred by them relating to the prospective financial
information contained in this prospectus.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
Restricted Notes, as reflected in LIFT's accounting records on the date of the
exchange. Accordingly, LIFT will not recognize any gain or loss for accounting
purposes as a result of the consummation of the exchange offer.
TRANSFER TAXES
LIFT will pay any transfer taxes imposed in the United States that are
applicable to the exchange of Restricted Notes pursuant to the exchange offer.
If, however, a transfer tax is imposed for any reason other than the mere
exchange of Restricted Notes pursuant to the exchange offer, the amount of any
transfer taxes--whether imposed on a registered holder or any other person--will
be payable by the tendering holder. For example, you will be responsible for
transfer taxes, if certificates representing exchange notes are to be delivered
to, or are to be registered or issued in the name of, any person other than the
registered holder of the Restricted Notes tendered. If satisfactory evidence of
payment of those taxes or exemption from them is not submitted with the letter
of transmittal, LIFT will bill the amount of the applicable transfer taxes
directly to the tendering holder. Any holder who is subject to taxes outside the
United States and who is considering tendering Restricted Notes for exchange
should consult its tax advisors as to the particular tax consequences to it of
exchanging Restricted Notes for exchange notes.
CONTINUING RESTRICTIONS ON THE TRANSFER OF RESTRICTED NOTES
All Restricted Notes that are not tendered will continue to be subject to
the restrictions on transfer set forth in the indenture governing the notes.
After completion of the exchange offer, LIFT will no longer have any obligation
to file any further registration statement for any Restricted Notes.
Accordingly, after the completion of the exchange offer, you will be able to
offer for sale, sell or otherwise transfer untendered Restricted Notes only as
follows:
(1) to LIFT;
(2) pursuant to a registration statement that has been declared
effective under the Securities Act;
(3) for so long as the Restricted Notes are eligible for resale pursuant
to Rule 144A under the Securities Act, to a person you reasonably believe is a
qualified institutional buyer within the
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meaning of Rule 144A, that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the transfer is being
made in reliance on the exemption from the registration requirements of the
Securities Act provided by Rule 144A;
(4) pursuant to offers and sales that occur outside the United States to
foreign persons in transactions complying with the provisions of Regulation S
under the Securities Act;
(5) to an "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act that is an institutional investor
purchasing for its own account or for the account of this type of accredited
investor, in each case in a minimum principal amount of the Restricted Notes of
$250,000; or
(6) pursuant to any other available exemption from the registration
requirements of the Securities Act.
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LEASE INVESTMENT FLIGHT TRUST
LIFT
LIFT is a business trust that was established under Delaware law on
June 13, 2001 for the purpose of acquiring aircraft either directly or through
companies or trusts owned by it, issuing the notes and otherwise carrying out
the transactions described in this prospectus.
As of the date of this prospectus, LIFT has one direct subsidiary, LIFT 1,
which in turn has various domestic and foreign subsidiaries that own or lease
aircraft. The authorized business of LIFT's subsidiaries is limited to buying,
owning, leasing, maintaining, operating or selling aircraft.
LIFT's registered office is located at 1100 North Market Street, Rodney
Square North, Wilmington, Delaware 19890-0001 care of Wilmington Trust Company
and its telephone number is (302) 651-1000.
LIFT was originally wholly owned by Automatic LIFT I, LP, which is
affiliated with Automatic LLC. Automatic LLC is headquartered in Orlando,
Florida and as of June 26, 2001 had eight employees. Automatic LLC, through its
operating affiliates, originates, acquires and sells aircraft and services
aircraft leases and arranges various forms of financings in the aviation leasing
industry.
As of the date of this prospectus, Automatic LLC does not own any aircraft,
but intends for it or its affiliates to own aircraft in the future. As a result,
it is possible that Automatic LLC may face conflicts of interest with LIFT from
time to time if other aircraft owned by it or its affiliates are being marketed
for sale or lease at the same time as LIFT's aircraft are being so marketed.
Automatic LIFT 1, LP subsequently sold 50.1% of the beneficial interests of LIFT
to four other affiliates of Automatic LLC. As a result, Automatic LIFT 1, LP
owns 49.9% of the beneficial interests of LIFT while the other four affiliates
of Automatic LLC each own 12.525% of the beneficial interests of LIFT.
The outstanding notes are not, and the exchange notes will not be,
obligations of, or guaranteed by, Automatic LLC or any of its affiliates other
than LIFT and its subsidiaries.
BANKRUPTCY CONSIDERATIONS RELATING TO "CONSOLIDATION" ISSUES
Automatic LIFT 1, LP and the other four affiliates that own LIFT are
indirectly owned by Automatic Flight Operations, LLC, a Delaware limited
liability company, and Automatic Aircraft, LP, a Delaware limited partnership,
each of which are also affiliates of Automatic LLC. If either Automatic Flight
Operations LLC or Automatic Aircraft, LP becomes a debtor in a case under the
U.S. Bankruptcy Code, a creditor, a bankruptcy trustee, the debtor itself or
another party in interest could request the court to order that the assets and
liabilities of LIFT, LIFT's subsidiaries or the direct owners of the beneficial
interests in LIFT or their general partners be substantively consolidated with
those of either or both of Automatic Flight Operations, LLC and Automatic
Aircraft, LP. If such a request is made, delays in payments on the initial notes
could result. Should the bankruptcy court rule in favor of any such request, the
court could substantively consolidate the assets and liabilities of LIFT, LIFT's
subsidiaries or the direct owners of the beneficial interests in LIFT or their
general partners or otherwise consider them to be part of the bankruptcy estate
of either or both of Automatic Flight Operations, LLC and Automatic Aircraft, LP
or take other actions that could result in reductions in payments on the notes
and that would otherwise be adverse to you.
On June 26, 2001, Milbank, Tweed, Hadley & McCloy LLP delivered a reasoned
opinion to LIFT that, based on various assumptions and qualifications, in a case
under the U.S. Bankruptcy Code in which either Automatic Flight Operations, LLC
or Automatic Aircraft, LP is the debtor, a court applying federal bankruptcy law
and properly presented with the facts and exercising reasonable discretion would
not grant an order substantively consolidating the assets and liabilities of
LIFT, or LIFT's subsidiaries or its direct equity owners or their general
partners with those of Automatic Flight Operations, LLC or Automatic Aircraft,
LP.
The above opinion noted, however, that there is no case law directly on
point, that a court may decide differently from the views expressed in the
opinion and that the opinion represents only
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counsel's best judgment and is not binding in the courts. Moreover, the opinion
stated that it depends on the accuracy of many factual assumptions that the
counsel has not independently verified and that different facts could lead a
court to reach a different conclusion.
BUSINESS OF LIFT
The business of LIFT and its subsidiaries is limited to buying, owning,
leasing and selling a portfolio of aircraft. These limitations arise from
restrictions in their respective charter documents and covenants in the
indenture for the notes.
The portfolio of aircraft consists initially of the 39 aircraft of which
have been delivered as of the date of this prospectus. This portfolio is
described under "Portfolio Information".
LIFT and its subsidiaries may acquire additional commercial passenger or
freight aircraft from Automatic, General Electric Capital Corporation and their
respective affiliates and others. The indenture contains a number of conditions
to the acquisition of additional aircraft and to the financing of such an
acquisition. If those conditions are met, there is no limit in the indenture on
the number of additional aircraft that LIFT may acquire.
GE Capital Aviation Services, Limited has agreed with LIFT to act as the
servicer of the aircraft portfolio. It has agreed, as the servicer, to collect
rents and other amounts due from lessees, to monitor the maintenance, insurance
and other obligations under the aircraft leases, to enforce rights against
lessees, to remarket aircraft for re-lease or sale and to perform other
specified aircraft-related services. Further information about the servicing
agreement and the servicer is set forth under "--The Servicing Arrangements".
All of the net revenues of LIFT and its subsidiaries are used to pay
principal, interest and other amounts due as to the notes or to provide for cash
reserves for some or all of the classes of notes. Except for accruals for the
payment of anticipated expenses and required reserves, none of the revenues will
be re-used or retained in the business of LIFT and its subsidiaries. In
addition, none of the earnings of LIFT may be distributed to the holders of its
beneficial interest until all notes are repaid in full with the limited
exception of reimbursing any payments made by those holders to cure interest
shortfalls.
Because the notes do not provide for fixed principal payments, not just the
ultimate repayment of the notes but the amount of individual payments and the
speed of repayment are fully a function of LIFT's ability to collect revenues
from the portfolio of the 39 initial aircraft and, if acquired, additional
aircraft. Set forth below are a variety of factors that, in addition to general
economic conditions, could influence materially the collection of
revenues--principally lease rents and sale proceeds--available for debt
repayment.
CHANGES IN THE AIRCRAFT PORTFOLIO. The assumptions regarding the expected
cash flow of LIFT are subject not only to a variety of economic factors, some of
which have been discussed in this prospectus, but also to any substantial change
in the composition of the aircraft portfolio from that initially contemplated.
Any substantial changes in that composition could significantly change expected
cash flows and the nature and degree of risks affecting cash flow. Four
principal factors could affect the fleet composition.
(1) THE EXERCISE OF PURCHASE OPTIONS BY LESSEES. The exercise of a
lessee purchase option may result in sales proceeds lower than target sales
prices of the aircraft if payments on the notes have not been made as assumed.
Four lessees with respect to five of the initial aircraft, representing 15.17%
of the aggregate initial appraised value, have unexpired options to purchase
aircraft. The assumptions described under "Note Payment Assumptions" assume that
those options will not be exercised.
(2) THE NON-DELIVERY OF INITIAL AIRCRAFT. General Electric Capital
Corporation is required to refund a portion of the purchase price to LIFT 1, in
the event any of the undelivered initial aircraft or substitute aircraft
are not delivered by January 22, 2002. In the event of any delivery failure,
payments will vary from those expected had the aircraft been delivered despite
the refund.
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(3) THE LOSS OF AIRCRAFT THROUGH CASUALTY OR GOVERNMENTAL TAKING. The
proceeds of insurance and taking awards may not be sufficient to compensate for
the loss of the revenue of the affected aircraft.
(4) THE PURCHASE OF ADDITIONAL AIRCRAFT. LIFT may acquire other
aircraft in the future. Although any additional aircraft may add to the cash
flow of LIFT and their acquisition is subject to confirmation by the rating
agencies rating the notes that they will not lower, qualify or withdraw any
rating on the notes as a result and other requirements of the indenture
governing the notes, LIFT cannot predict the effect of any additional aircraft
on its cash flows and ability to repay the notes.
MARKET INTEREST RATE FLUCTUATIONS. Interest rate exposure arises to the
extent that LIFT's fixed and floating rate obligations under the notes do not
correlate to either or both of the mix of fixed and floating rate rental
payments for different periods and the timing of those payments. Although LIFT
will attempt to hedge that exposure as described in "Management's Discussion and
Analysis of Financial Condition and Results of Operations", it cannot assure you
that it will be effective in implementing its hedging goals. In addition, the
premature termination of any lease as well as the sale or loss of an aircraft
may result in LIFT incurring prepayment or cancellation costs under its hedging
agreements.
LESSEE CREDIT PROBLEMS AND DEFAULT. The ability of each aircraft lessee to
perform its obligations under its lease with a LIFT subsidiary will depend not
only on the managerial skills of the lessee's employees but also on general
economic conditions in the country or region in which it operates as well as
competition, fare levels, passenger demand, and operating costs. Many of LIFT's
existing lessees are in a weak financial position, and this is likely to be the
case with future aircraft lessees as well. As the aircraft approach the end of
their realizable useful life, it is likely that the aircraft will be leased to
less creditworthy lessees and for lower rates. In a portfolio of the size of
LIFT's, you should expect that some number of aircraft lessees at some time may
be slow in paying or may fail to pay in full. Others may have their lease
obligations significantly restructured.
No initial lessee currently is in default as to its payment obligations
under any initial lease. You should expect defaults to occur, and LIFT cannot
assure you that default levels will not increase over time.
LESSEE'S LOCAL ECONOMIC CONDITIONS. The commercial aviation industry
throughout the world generally is highly sensitive to general economic
conditions. Because a substantial portion of business and, especially, leisure
airline travel is discretionary, the industry has tended to suffer during
economic downturns and times of political or military crisis. In addition, local
economic and political conditions can influence the performance of a lessee
located in a particular region. For example, it is expected that the recent
terrorist attacks in the United States and any economic or military response by
the United States government will adversely affect those lessees directly or
indirectly serving the commercial aviation industry of the United States and any
other affected regions. The effect of local conditions on LIFT will be more or
less intense depending on the concentration of the number of its lessees in that
region. See "Portfolio Information--Concentration of Portfolio". Also, because
several lessees' revenues are generated in local currencies while their lease
obligations are payable in U.S. dollars, a significant appreciation in the U.S.
dollar may impair their ability to make payments under their leases.
EUROPEAN CONCENTRATION. As of the date of this prospectus, lessees based in
Europe account for aircraft having 43.03% of the aggregate initial appraised
value, with 31.91% based in "developed" European markets and 11.12% based in
"emerging" European markets. The commercial aircraft industry in European
countries, as in the rest of the world generally, is highly sensitive to general
economic conditions. Because a substantial portion of airline travel for
business and especially leisure is discretionary, the industry has tended to
suffer severe financial difficulties during economic downturns. The financial
prospects, accordingly, for European lessees can be expected to depend largely
on the level of economic activity in Europe generally and in the specific
countries in which these lessees operate. A recession or other worsening of
economic conditions in one or more of these countries,
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particularly if combined with either or both high fuel prices and a weak euro,
may have a material adverse effect on the ability of European lessees to meet
their financial and other obligations under the leases. In addition, commercial
airlines in Europe face, and can be expected to continue to face, increased
competitive pressures, in part as a result of the continuing deregulation of the
airline industry by the EU. LIFT cannot assure you that competitive pressures
resulting from this deregulation will not have a material adverse impact on the
operations of LIFT's European lessees.
RUSSIAN CONCENTRATION. As of the date of this prospectus, one lessee based
in Russia accounted for aircraft having 5.49% of the aggregate initial appraised
value. The Russian lessee is the flag carrier of that nation. Russia has
recently experienced a significant downturn in its economic and financial
condition. Additionally, as a result of the lack of definite information about
the ownership of the Russian lessee, its corporate governance has often been the
subject of international scrutiny.
TURKISH CONCENTRATION. As of the date of this prospectus, one lessee based
in Turkey accounted for aircraft having 5.63% of the aggregate initial appraised
value. The recent decrease in value of the Deutsche mark, which is the principal
currency in which the Turkish lessee receives its revenue, coupled with the
decrease in value of the Turkish lire may affect the ability of the Turkish
lessee to meet its U.S. dollar denominated rental and other payments due under
the leases.
NORTH AFRICA AND MIDDLE EAST CONCENTRATION. As of the date of this
prospectus, lessees based in Northern Africa and the Middle East account for
aircraft having 4.21% of the aggregate initial appraised value. Political
violence has had a significant adverse impact on the general economic conditions
in Northern Africa and the Middle East in recent years. The economic prospects
of the North African and Middle Eastern region are dependent on the general
political outlook, which can vary greatly from year to year. Political upheaval
or political violence could adversely affect the prospects of the lessees to
meet their obligations. Any such factors could also affect LIFT's ability to
regain possession of the aircraft upon a default.
One lessee in this region is the flag carrier of Morocco. This carrier
accounts for aircraft having 2.74% of the aggregate initial appraised value. The
other lessee accounts for aircraft having 1.47% of the aggregate initial
appraised value.
ASIA PACIFIC REGION CONCENTRATION. As of the date of this prospectus,
lessees based in the Asia Pacific region, including China, account for aircraft
having about 28.39% of the aggregate initial appraised value. The commercial
aircraft aviation industry in Asia was adversely affected by the severe economic
and financial difficulties experienced in 1998 and 1999. The economies of
Indonesia, Thailand, Japan, Korea and Malaysia experienced particularly acute
difficulties resulting in many business failures, and in many cases significant
depreciation of local currencies and downgrades of sovereign and corporate
credit ratings. The regional economic downturn undermined business confidence,
reduced demand for air travel and adversely impacted the results of operations
of some of LIFT's lessees in the region. Since 1999, there has been some
stabilization and recovery in the economies of the region. If recessionary
conditions that prevailed in large parts of the region were to recur, it would
have a significant, adverse impact on global aircraft demand.
LATIN AMERICAN CONCENTRATION. As of the date of this prospectus, lessees
based in Latin America account for aircraft having 5.87% of the aggregate
initial appraised value. Although some countries in Latin America have
experienced in the past several years increased political stability, overall
increased economic growth, lower inflation rates and revitalized economies, the
progress has not been regionwide and may not be maintained or furthered.
During 1999, Brazil experienced significant downturns in its economy and
financial markets, including large decreases in financial asset prices and
dramatic decreases in the value of the currency. Currently, Brazil continues to
experience decreases in the value of its currency. Any general deterioration in
the Brazilian economy will mean that lessees may be unable to generate
sufficient revenues in Brazilian currency to pay rental payments in U.S. dollars
under the leases. Future adverse
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developments in Brazil can affect not only leases with Brazilian lessees but,
more importantly, could spread throughout Latin America and other "emerging"
economies and affect other Latin American lessees of LIFT. Recent adverse
economic developments in Argentina may also spread to other countries in the
region affecting the Latin American lessees of LIFT. As of the date of this
prospectus, aircraft leased to Brazilian lessees account for 5.87% of the
aggregate initial appraised value.
NORTH AMERICAN CONCENTRATION. As of the date of this prospectus, lessees
based in North America account for aircraft having 17.45% of the aggregate
initial appraised value. The commercial aircraft industry in North America is
highly sensitive to general economic conditions. Since air travel is largely
discretionary, the industry has suffered severe financial difficulties during
economic downturns. In addition, the recent terrorist attacks on the United
States have reduced air travel demand and increased costs, raising the
likelihood of severe financial difficulties for those airlines directly or
indirectly serving the United States commercial aviation industry. Over the last
decade, a number of the major North American passenger airlines have filed
Chapter 11 bankruptcy proceedings and several major United States airlines have
ceased operations altogether. The effects of the recent terrorist attacks on the
United States, increasing competition from low-cost air carriers and an
inability to reduce labor and other costs to sustainable levels continues to put
pressure on North American airline margins, and recently several major North
American passenger airlines have announced losses as a result. Further
bankruptcy or similar proceedings by low-cost or other North American carriers
may adversely affect the ability of North American lessees of LIFT to make
timely and full rental payments.
OFF LEASE. As of the date of this prospectus, one aircraft representing
1.05% of the aggregate initial appraised value was off lease.
HIGHER COSTS FROM LEASE DEFAULT. Although LIFT has the right to repossess
aircraft and to exercise remedies upon a lease default, it may incur significant
costs in the process. Those costs include legal and other expenses of court or
other governmental proceedings, particularly if the lessee is contesting the
proceeding or is in bankruptcy, to obtain possession and re-registration of the
aircraft and flight and export permissions. Delays resulting from any such
proceedings would also increase the period of time during which the relevant
aircraft are not leased and generating lease income. LIFT may, moreover, incur
substantial maintenance or repair costs that a defaulting lessee has failed to
pay and may need to pay maintenance, including modification costs, and pay off
liens and governmental charges on the aircraft to obtain clear possession and to
re-market the aircraft effectively. Any such cost or delays may adversely affect
the amounts available to pay to the holders of the notes.
PAYMENT OF MAINTENANCE COSTS AND FUNDING OF MAINTENANCE RESERVES. Any
failure of an aircraft to be maintained or modified properly in accordance with
manufacturer's requirements or airworthiness directives and other governmental
requirements, including those relating to noise and emissions standards, can
impair the safety of the aircraft, result in grounding or penalties, can affect
the ability to re-lease or to sell the aircraft and can affect the net revenues
available to make payments on the notes. The costs of maintenance can be
substantial and may have a higher payment priority than that of the notes. In
many cases, the lessee is required to provide for the cost of modifications and
other maintenance. Lessees could, however, fail to pay those costs, and the
burden would fall on LIFT. In addition, LIFT or its subsidiary as the lessor is,
in many instances, required to bear a portion of the maintenance costs, and the
pressure of competition may require it to bear an increasing portion of those
costs in the future. Although LIFT established a cash reserve of approximately
$83.0 million on June 26, 2001, any significant variations in the costs required
to be paid directly by LIFT may materially impair the ability of LIFT to make
payments on the notes.
OTHER OPERATING COSTS. As in the case of maintenance costs, LIFT may incur
other operational costs upon a lessee default or where the terms of the lease
require it to pay a portion of those costs. Those costs include:
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(1) the costs of casualty, liability and political risk insurance and
the liability costs or losses when insurance coverage has not been or cannot be
obtained as required or is insufficient in amount or scope;
(2) the costs of storing, licensing, exporting or importing an aircraft,
airport taxes, customs duties, air navigation charges and similar governmental
or quasi-governmental impositions, which can be substantial;
(3) penalties and costs associated with the failure of lessees to keep
the aircraft registered under all appropriate local requirements; and
(4) unreimbursed or unreimbursable withholding taxes and other taxes or
charges in some jurisdictions in respect of the aircraft, the leases or payments
under the leases, such as those due to changes in law or inability to negotiate
for or enforce reimbursement obligations from lessees.
The failure to pay some of these costs can result in liens on the aircraft,
and the failure to register can result in a loss of insurance. These matters can
prevent the re-lease, sale or other use of the aircraft until the problem is
cured.
GOVERNMENT REGULATIONS. In addition to the general requirements regarding
maintenance of the aircraft, aviation authorities from time to time issue
airworthiness directives requiring the operators of aircraft to take particular
maintenance actions or make particular modifications with respect to all
aircraft of certain designated types. Aircraft manufacturers may also issue
their recommendations. To the extent that a lessee fails to comply with
directives required to maintain its certificate of airworthiness or other
manufacturer requirements in respect of an aircraft or if the aircraft is not
currently subject to a lease, LIFT may have to bear or, to the extent required
under the relevant lease, share the cost of compliance. Other governmental
regulations relating to noise and emissions levels may be imposed not only by
the jurisdictions in which the aircraft are registered, possibly as part of the
airworthiness requirements, but also in other jurisdictions where the aircraft
operate.
An airworthiness directive of the FAA requires the replacement of insulation
blankets on MD series aircraft by June 2005. The initial 39 aircraft include 11
MD series aircraft, which represent 17.04% of the aggregate initial appraised
value. It is currently not clear whether and to what extent manufacturers,
owners or lessees will have to bear the cost of compliance, and LIFT may bear
significant costs in ensuring compliance with these standards. Another recent
airworthiness directive of the FAA requires the installation of smoke detection
and fire suppression systems in the cargo area of all U.S. registered aircraft,
and LIFT may incur significant costs related to the installation of these
systems. Aviation authorities in Europe are also considering issuing such an
airworthiness directive in the future.
Certain jurisdictions are discussing the possible implementation of more
stringent noise abatement requirements. Current proposals suggest that these
so-called "Stage 4" requirements would initially apply to new aircraft and would
be implemented for existing fleets in a phased manner over several years. While
the timing of the adoption of any Stage 4 requirements is uncertain, the
implementation of any requirements could involve significant costs to LIFT and
adversely affect aircraft values.
Finally, the deregulation of commercial aviation in the United States, the
European Union or elsewhere where lessees currently, or may in the future,
operate aircraft, may cause further uncertainty in the commercial aviation
industry. LIFT cannot assure you that any of the foregoing risks relating to
government regulations will not have a material adverse effect on LIFT's ability
to make payments on the notes.
THE NEED TO RE-LEASE OR SELL AIRCRAFT. One aircraft is currently off-lease
and is being marketed for lease. The number and types of the initial aircraft
that LIFT must place with lessees through December 31, 2005 is presented in the
table below. That table shows the years in which the leases for those aircraft
are contractually scheduled to expire. The table illustrates that the leases for
23 of the initial aircraft, representing approximately 47.73% of the aggregate
initial appraised value, are
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scheduled to expire by December 31, 2005. The table assumes that, except as
indicated, no lease terminates prematurely, no extension or early termination
options will be exercised, no substitute aircraft are delivered, no aircraft are
sold and no additional aircraft are purchased. More aircraft will need to be
re-leased to the extent leases terminate prematurely.
LIFT LEASE PLACEMENT REQUIREMENT AT JUNE 13, 2001
<Table>
<Caption>
YEAR ENDING DECEMBER 31,
--------------------------------------------------------------------
AIRCRAFT TYPE 2001 2002 2003 2004 2005
------------- -------- -------- -------- -------- --------
B767-300ER............................................ 0 0 1 0 1
B737-300.............................................. 0 1 5 1 0
MD-82................................................. 2 0 3 0 1
A320-200.............................................. 0 0 1 0 0
B747-400.............................................. 0 0 0 0 0
B737-800.............................................. 0 1 0 0 0
MD-11F................................................ 0 0 0 0 1
B737-700.............................................. 0 0 0 1 0
B737-400.............................................. 0 0 0 1 1
B737-500.............................................. 0 1 0 0 0
MD-83................................................. 0 0 1 0 0
-- -- -- -- --
TOTAL............................................. 2 3 11 3 4
</Table>
DIFFICULTIES IN RE-LEASING OR SELLING AIRCRAFT AT FAVORABLE TERMS. The
servicer, GE Capital Aviation Services, Limited, has agreed to seek to re-lease
aircraft serviced by it as they become available upon the termination of any
lease. The servicer has not assured LIFT, and LIFT cannot assure you, that LIFT
will be able to re-lease aircraft on a timely basis, with equally favorable
rental rates and otherwise on lease terms that will allow LIFT to make payments
in full on the notes. LIFT's ability to obtain timely and favorable lease terms
or to sell aircraft at attractive prices may be adversely affected by
unpredictable changes in general economic conditions, passenger demand, market
demand for and value of the applicable aircraft and the competitive strength of
the airline industry generally. The availability of commercial jet aircraft for
lease or sale has periodically experienced cycles of oversupply and undersupply,
resulting in sharp decreases and increases in aircraft values and lease rates.
Among other factors that could influence lease terms and sales prices are the
following:
(1) cyclical changes in interest rates and the availability of credit;
(2) fluctuations in the cost of fuels and other materials, labor costs,
costs associated with changing governmental regulations and air traffic control
constraints;
(3) manufacturer production levels, particularly increased production of
new aircraft, as announced by Boeing and Airbus, which makes older, used models
less attractive, especially in Asia where an oversupply is already perceived to
exist;
(4) the cessation or announced cessation of production of particular
aircraft models or series, such as the MD series and Boeing 737-300s, 737-400s
and 737-500s, of which there are 24 in LIFT's initial portfolio, representing
approximately 40.48% of the aggregate initial appraised value of the portfolio;
(5) the operating history of particular aircraft, the identity of its
operators and legal and regulatory requirements affecting its operation and
transfer or leasing;
(6) changes in aircraft technology, either significant advances by
manufacturers or governmentally mandated modifications, that may render older
models substantially less attractive or may result in modification costs that
reduce net sales prices or rentals; and
(7) competition from aircraft manufacturers, airlines, aircraft leasing
companies, financial institutions, aircraft broker and special purpose leasing
vehicles that may have greater financial resources and greater legal and
financial flexibility to structure and offer more favorable leasing, pricing or
financing alternatives.
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The concentration of the types of aircraft held by LIFT may amplify some of
the factors noted above. The initial aircraft include eleven aircraft types,
three of which represent together 56.35% of the aggregate initial appraised
value, with Boeing 767-300ERs accounting for 26.50%, Boeing 737-300s accounting
for 18.85% and Boeing MD-82 accounting for 11.00% of that aggregate value. Also,
narrowbody aircraft account for 59.54% of the aggregate initial appraised value.
THE SERVICING ARRANGEMENTS
GE Capital Aviation Services, Limited, or GECAS as it is commonly known, is
providing various aircraft-related services to LIFT and its subsidiaries. GECAS
is headquartered in Shannon, Ireland where it had 98 employees as of March 31,
2001. GE Capital Aviation Services, Inc., of which GECAS is a subsidiary, had
117 employees worldwide as of March 31, 2001 at operations in Stamford,
Connecticut; Miami, Florida; Hong Kong; Singapore and Vienna and a number of
other locations worldwide.
SERVICER BUSINESS HISTORY
For more than 25 years prior to the formation of GECAS in 1993, General
Electric Capital Corporation provided financial services to airlines and other
aircraft owners and owned aircraft through its Transportation and Industrial
Funding Corporation division and other affiliates.
General Electric Capital Corporation acquired a controlling interest in
Polaris Holding Company in 1986, and then acquired the remaining interest in
1991. Polaris Group was formed in 1974 to acquire aircraft for lease to
commercial airlines. Beginning in the mid 1980's, it acted as an operating
lessor, acquiring and managing aircraft for its own account and for the account
of investment entities sponsored by one of its subsidiaries.
GECAS and its affiliated aircraft servicing entities were formed and
commenced operations in September and October 1993 to focus in one servicing
group various aircraft-related ownership, financing, management and other
servicing activities. This GECAS servicing group did not acquire the assets of
the General Electric Capital Corporation Transportation and Industrial Funding
Corporation division or the assets of Polaris Group, but rather it took over the
responsibility of providing management services for all or substantially all of
the aircraft assets owned or formerly managed by these entities.
In addition, the GECAS servicing group succeeded to the management, but not
the ownership, of substantially all of the aircraft formerly managed by debis
AirFinance Ireland plc, formerly known as AerFi Group plc, and before that, as
GPA Group plc, in connection with a restructuring of debis AirFinance Ireland as
a result of financial difficulties experienced in late 1992 and in 1993. debis
AirFinance Ireland was founded in 1975 to provide aircraft leasing and related
services to the commercial aviation industry, and, in 1979, it began purchasing
new aircraft for its own account.
Prior to its formation in 1993, the GECAS servicing group had no operating
history.
GECAS and its servicing affiliates offer their services to aircraft owners,
lenders and investors, including General Electric Capital Corporation and its
affiliates. On December 31 of each of 1996, 1997, 1998, 1999 and 2000, the
servicing group managed 896, 850, 849, 930 and 1,057 aircraft, respectively, and
its affiliates owned, 445, 484, 544, 601 and 728 aircraft, respectively. As of
June 30, 2001, the servicing group managed 1,126 aircraft, and its affiliates
owned 778 aircraft.
SERVICER OPERATIONS
GECAS and its affiliates manage one of the world's most significant
portfolios of commercial aircraft. As of June 30, 2001, the portfolio of
aircraft managed by GECAS consisted of 1,126 aircraft, on lease to more than 160
lessees in 62 countries throughout the world. Since 1996 General Electric
Capital Corporation, an affiliate of GECAS, has entered into several multi-year
orders with Boeing and
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Airbus for the B737, B757, B767, B747, B777, A320 and A330 families of aircraft.
In 2000, General Electric Capital Corporation also entered into contracts with
Bombardier, Embraer and Fairchild-Dornier for CRJ 200, CRJ 700 & CRJ 900, ERJ
170 & ERJ 190 and FD 728 & FD 928 regional jet aircraft. In total all of these
contracts involve over 1,000 firm and option aircraft purchases. As of June 30,
2001, General Electric Capital Corporation has taken delivery of 167 aircraft
under these agreements. In addition to these contracts, General Electric Capital
Corporation also purchases aircraft from airlines and investors.
In addition to acting as the servicer for the aircraft owned by LIFT's
subsidiaries, GECAS manages aircraft and related assets owned by Aircraft
Finance Trust, Airplanes U.S. Trust and Airplanes Limited, debis AirFinance
Ireland plc, Commercial Aircraft Leasing Ltd., General Electric Capital
Corporation and affiliates of those entities and others. As of June 30, 2001,
778 aircraft, or 69% of the total by number, of the aircraft managed by GECAS,
were owned by General Electric Capital Corporation and its affiliates. Moreover,
it is also likely that GECAS will manage additional aircraft owned by others,
and it may in the future participate as a third party servicer in leasing
programs with objectives like those of LIFT.
One of GECAS' principal businesses is providing a broad range of financial
products to airlines and aircraft operators and to aircraft owners, lenders and
investors throughout the world. To meet the fleet financing needs of its airline
customers, GECAS and its affiliates offer financing leases, operating leases and
other financial products. In conjunction with this business, GECAS and its
affiliates are responsible for developing, negotiating and consummating
aircraft-related investment opportunities in the aviation industry for General
Electric Capital Corporation, including the acquisition of aircraft for General
Electric Capital Corporation. Also, General Electric Capital Corporation holds
the majority of the most junior class of debt in the aircraft asset
securitization vehicles Aircraft Finance Trust, Airplanes U.S. Trust and
Airplanes Limited, all competitors of LIFT, and may acquire debt or beneficial
interests in other securitization vehicles that own a portfolio of aircraft
assets.
GECAS intends to continue to market a broad range of products, and to
arrange and negotiate the sale of aircraft and related assets from the portfolio
it manages, and to arrange and negotiate securitization transactions involving
aircraft assets.
GECAS offers a broad range of aircraft management services to aircraft
owners, lenders and investors, including:
(1) collection of rental payments;
(2) arranging and monitoring of aircraft maintenance performed by
others;
(3) limited technical inspection of aircraft;
(4) arranging and monitoring insurance;
(5) arranging for aircraft appraisals;
(6) registration and deregistration of aircraft;
(7) monitoring compliance with lease agreements;
(8) enforcement of lease provisions against lessees;
(9) investigating compliance with applicable airworthiness directives;
and
(10) facilitating delivery and redelivery of aircraft.
The table below lists the different aircraft comprising the portfolio
managed by GECAS as of June 30, 2001, by manufacturer and by whether the
aircraft are owned and managed by GECAS and its affiliates or managed for third
parties.
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GECAS MANAGED PORTFOLIO
<Table>
<Caption>
GENERAL ELECTRIC
CAPITAL CORPORATION MANAGED FOR LIFT INITIAL
AIRCRAFT TYPE AND CLASS FLEET(1) THIRD PARTIES(2) TOTAL AIRCRAFT
----------------------- ------------------- ---------------- -------- ------------
Airbus
A300................................... 15 3 18 --
A310................................... 7 1 8 --
A319................................... 67 -- 67 --
A320................................... 47 29 76 4
A321................................... 10 -- 10 --
A330................................... 7 -- 7 --
Boeing
B727................................... 8 2 10 --
B737-200............................... 42 22 64 --
B737-300/400/500/600(3)................ 200 70 270 13
B737-700/800/900....................... 102 3 105 5
B747-100/200/300/400................... 29 1 30 1
B757-200............................... 29 3 32 --
B767-200EM............................. 1 -- 1 --
B767-200ER............................. 7 3 10 --
B767-300ER............................. 35 18 53 5
B777-200............................... 6 -- 6 --
McDonnell Douglas
DC-8................................... 2 19 21 --
DC-9................................... -- 34 34 --
DC-10.................................. 9 3 12 --
MD-11.................................. 5 6 11 1
MD-81.................................. -- 10 10 --
MD-82.................................. 21 30 51 9
MD-83.................................. 15 30 45 1
MD-87.................................. -- 6 6 --
MD-88.................................. 12 -- 12 --
Regional Jets............................ 96 -- 96 --
Fokker F100.............................. -- 19 19 --
Other Jets............................... 6 36 42 --
----- ----- ------- -----
Total.................................. 778 348 1,126 39
Body Type:
Widebody............................... 122 35 157 7(5)
Narrowbody............................. 653 278 931 32
Turboprops............................. 3 35 38 --
Noise Compliance:(4)
Stage 2................................ 15 32 47 --
Stage 3................................ 763 316 1,079 39
</Table>
--------------------------
(1) Some aircraft included in the General Electric Capital Corporation fleet are
owned by joint ventures or pursuant to other arrangements in which unaffiliated
parties have interests.
(2) The third parties comprise primarily of debis AirFinance Ireland plc, the
Airplanes Group, Aircraft Finance Trust and Commercial Aircraft Leasing Ltd.
(3) For purposes of this table, 7 Boeing 737 aircraft have been included in the
General Electric Capital Corporation fleet but both debis AirFinance Ireland plc
and General Electric Capital Corporation are parties to the relevant leases.
(4) Turboprop aircraft have been classified as Stage 3 compliant.
(5) The LIFT initial aircraft portfolio includes one freighter aircraft.
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THE SERVICING AGREEMENT
GECAS as the servicer and LIFT, on behalf of itself and its subsidiaries,
entered into a servicing agreement dated as of June 26, 2001. The servicing
agreement sets forth the various duties of GECAS as the servicer with respect to
the management and administration of the aircraft and the leases, the aircraft
marketing activities to be performed by the servicer and the limited aircraft
management-related obligations of the servicer in connection with offers and
sales by LIFT of refinancing or additional notes.
The servicer has agreed to provide its services in accordance with the
express terms of the servicing agreement. The terms of the servicing agreement
provide that the servicer will act in accordance with laws applicable to it,
with directions given by the administrative agent on behalf of LIFT, with
specified standards of care and with specified standards regarding conflicts of
interest. The duties and obligations of the servicer are limited to those
expressly set forth in the servicing agreement, and the servicer has not
undertaken any fiduciary or other implied duties or obligations to LIFT and its
subsidiaries, the holders of the notes or any other person. In addition, the
servicer does not assume any liability or accountability for (a) the terms and
conditions of the notes, (b) the ability of LIFT to comply with the terms and
conditions of the notes, except that the servicing agreement does provide that
the servicer will use commercially reasonable efforts to keep LIFT in compliance
with specified covenants of the indenture that directly relate to the operation
of the aircraft and (c) the structuring or implementation of any aspect of the
various transactions contemplated by this prospectus, except as provided in the
servicing agreement.
The servicer has agreed to perform the services required by the servicing
agreement with reasonable care and diligence at all times and, if a conflict of
interest arises as to a LIFT aircraft and other aircraft managed by GECAS, the
servicer must perform the services in good faith. In addition, to the extent
that either two or more particular LIFT aircraft or a LIFT aircraft and other
aircraft managed by GECAS have substantially similar objectively identifiable
characteristics that are relevant for purposes of the particular services to be
performed, the servicer has agreed not to discriminate among those LIFT aircraft
or between any of the LIFT aircraft and any other managed aircraft on an
unreasonable basis.
If the servicer in good faith determines that circumstances as to a
particular aircraft or lease require an arm's-length negotiation between the
servicer or any of its affiliates and LIFT and the servicer believes it would
not be appropriate for it to act on behalf of LIFT, the servicer has agreed to
notify LIFT promptly and to withdraw from acting as the servicer with respect to
the matter and LIFT has agreed to appoint an independent representative to act
on its behalf. The servicer is entitled to act on its own or its affiliates'
behalf in those negotiations.
Neither LIFT nor the servicer may assign its rights and obligations under
the servicing agreement without the other's prior consent. The servicer may,
however, delegate some, but not all, of its duties to some of its affiliates.
AIRCRAFT SERVICES. The main categories of aircraft services being provided
by the servicer under the servicing agreement relate to:
(1) lease marketing and remarketing, lease negotiation and execution;
(2) collecting rental payments and other amounts due under leases,
aircraft maintenance, insurance monitoring and procurement, lease compliance and
enforcement and accepting delivery and redelivery of aircraft;
(3) sales services and aircraft acquisition;
(4) monitoring aircraft maintenance and providing records and
information about the aircraft;
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(5) using commercially reasonable efforts to keep LIFT in compliance
with terms of the indenture that directly relate to the operation of the
aircraft;
(6) limited assistance in connection with the exchange offer and the
public or private offerings of any notes, such as providing information relating
to the servicer and its affiliates for inclusion in any offering document or
offering circular, participating in marketing activities solely with respect to
the aircraft and providing underwriters, rating agencies and other advisors with
the reasonable opportunity to conduct due diligence with respect to the servicer
as it relates to the aircraft;
(7) legal and other professional services with respect to the lease,
sale or financing of the aircraft, any amendment or modification of any lease,
the enforcement of the rights of LIFT and its subsidiaries under any lease, any
disputes that arise as to any aircraft or for any other purpose that the
servicer reasonably determines is necessary in connection with the performance
of its services; and
(8) periodic reporting of operational information relating to the
aircraft.
OPERATING GUIDELINES. Under the servicing agreement, the servicer is
entitled to exercise such authority as is necessary to give it a practicable and
working autonomy in performing its services. The servicing agreement provides
that the servicer will give LIFT and its agents access to records related to the
aircraft under specified circumstances to enable LIFT to monitor the performance
by the servicer and not commingle any funds of LIFT and LIFT's subsidiaries with
its own funds. LIFT, acting through the administrative agent or directly, has
established monitoring and control procedures that it expects will enable it to
properly manage its and its subsidiaries' business and assets.
The servicing agreement requires all transactions entered into by the
servicer on behalf of LIFT and its subsidiaries other than intracompany
transactions to be at arm's length and on market terms unless otherwise agreed
or directed by the administrative agent on LIFT's behalf. Transactions or
matters on behalf of LIFT and its subsidiaries that require the prior written
approval of LIFT include:
(1) sales of or agreements to sell aircraft, other than as required by a
lease or the purchase agreement for the initial 39 aircraft, except for a
transfer of title or another interest in an aircraft (A) to or in favor of a
trust or another entity for the purpose of registering the aircraft under the
laws of an applicable jurisdiction so long as LIFT or a LIFT subsidiary retains
the beneficial or economic ownership of the aircraft, (B) from a trust or other
entity to LIFT or a LIFT subsidiary or (C) within or among LIFT and its
subsidiaries, provided that no such sale or disposition may be made under this
clause (C) other than to LIFT or any of its subsidiaries if the sale, transfer
or other disposition would materially adversely affect the holders of the notes
and provided further, that the rating agencies rating the notes are given
notification of any sale or disposition permitted by this clause;
(2) entering into any new leases if the lease does not comply with any
applicable operating covenants set forth under the indenture governing the notes
or if the new lease grants a purchase option in favor of the lessee and renewing
or extending existing leases, other than as a result of the exercise of a
renewal or extension option;
(3) terminating any lease or leases to any single lessee for aircraft
then having an aggregate depreciated net book value in excess of $75 million
unless a substantially similar replacement or substitute lease or leases is put
into place;
(4) unless provided for in the applicable budget, entering into any
contract for the modification or maintenance of aircraft where the costs to be
incurred by LIFT and its subsidiaries will (a) exceed the greater of the
estimated aggregate cost of a heavy maintenance check for similar aircraft and
total refurbishment of the related engines and available maintenance reserves or
other collateral under the related lease or (b) if those costs would be outside
the ordinary course of the business of LIFT and its subsidiaries;
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(5) issuing any guarantee on behalf of, or otherwise pledging the credit
of, LIFT or any of its subsidiaries, other than with respect to trade payables
in the ordinary course of business, any guarantees by LIFT of the obligations of
its subsidiaries, and other than any lien or indebtedness created in favor of
the issuer of a surety bond, letter of credit or similar instrument to be
obtained by LIFT or a LIFT subsidiary in connection with the detention of an
aircraft or other enforcement action under a lease;
(6) entering into, amending or granting a waiver with respect to, any
transaction between LIFT or its subsidiaries and General Electric Capital
Corporation or any of its affiliates not contemplated in the servicing
agreement;
(7) incurring any actual or contingent liability, unless contemplated in
the applicable budget, pursuant to a transaction of a type for which LIFT's
specific approval is otherwise required, incurred in the ordinary course of the
business of LIFT and its subsidiaries or incurred in entering into a lease or
performing any obligations under a lease; and
(8) entering into any order or commitment to acquire, or acquiring,
aircraft or aircraft engines unless provided for in a lease, the order or
commitment to acquire a replacement engine has been provided for in the
applicable budget or the servicer determines that the purchase or exchange of
the engine is necessary or appropriate.
BUDGETS. The servicing agreement calls for the administrative agent to
adopt each year a single lease operating budget for all aircraft owned by LIFT
and its subsidiaries and a single budget for the aircraft expenses related to
all aircraft.
SERVICING FEES AND THEIR PAYMENT PRIORITY. The servicing agreement provides
that LIFT will pay to the servicer a base fee of $150,000 per month, which
increases if additional aircraft are acquired by LIFT and a rent fee equal to 1%
of the aggregate amount of basic rent due for all or any part of a month for any
LIFT aircraft and 1% of the aggregate basic rent actually paid for the month.
The servicer also will receive a disposition fee equal to 1% of the gross
proceeds of the sale of any LIFT aircraft. The servicer also will be reimbursed
for aircraft maintenance costs and insurance, outside legal and professional
advisory fees and other out of pocket expenses incurred in connection with its
performance. The aggregate reimbursement expenses may be significant. LIFT has
also agreed to indemnify the servicer as described under "Risk Factors--Because
LIFT's contract limits its remedies against the servicer for poor or inadequate
performance, LIFT may at some point bear costs that will reduce its available
revenues and adversely affect the timely or full repayment of your notes." The
subsidiaries of LIFT have guaranteed the obligations of LIFT to the servicer.
The above fees and expense reimbursements are payable monthly in arrears on
the payment dates for the notes. The payment of those fees and expenses has a
payment priority that is higher than that of all payments on the notes.
The servicer is also entitled to additional servicing fees consisting of an
additional sales fee for each sale of an aircraft, an additional disposition fee
for each sale of an aircraft and an additional rent-related fee based on basic
rent actually paid. These additional servicing fees are payable only after all
amounts on the notes have been paid in full.
In addition, the servicer will be entitled to fees for aircraft management
services under the servicing agreement in connection with the offer and sale by
LIFT of refinancing and additional notes and any resales of notes by any person
who has any right to cause LIFT to assist in the resale.
TERM AND TERMINATION. The term of the servicing agreement expires on the
later of the payment in full of all amounts due on the notes and other similar
obligations and all amounts due to the holders of the beneficial interest in
LIFT and LIFT and its subsidiaries ceasing to hold any aircraft. Each party also
has the right to terminate the servicing agreement under specified
circumstances.
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The servicer has the right to terminate the servicing agreement if, among
other things, LIFT defaults in its payment and other obligations under the
servicing agreement and related documents, any material representation or
warranty made by LIFT or its subsidiaries is false or misleading in a manner
material to the servicer, LIFT or its subsidiaries become subject to bankruptcy
or other insolvency proceedings, neither LIFT nor any of its subsidiaries holds
any aircraft or the indenture or any guaranty in favor of the servicer ceases to
be in effect.
The servicer may resign under the servicing agreement with respect to all
aircraft, or at its election, any affected aircraft if it reasonably determines
that directions given, or services required, would, if carried out, be unlawful
under applicable law, be in violation of any General Electric Company corporate
policy regarding business practices or legal, ethical or social matters, be
likely to lead to an investigation by any governmental authority of the servicer
or its affiliates, expose the servicer to liabilities for which, in the
servicer's good faith opinion, adequate bond or indemnity has not been provided
or place the servicer in a conflict of interest with respect to which, in the
servicer's good faith opinion, the servicer could not continue to perform its
obligations under the servicing agreement. Whether or not it resigns, the
servicer is not required to take any action of the foregoing kind. The servicer
may also resign in the event it becomes subject to unindemnified taxes.
LIFT has the right to terminate the servicing agreement upon payment in full
of the notes and other similar obligations. LIFT also has the right to terminate
the servicing agreement if, among other things, the servicer ceases to be at
least 75% owned directly or indirectly by General Electric Capital Corporation
or its ultimate parent, General Electric Company, the servicer breaches its
obligations under the servicing agreement in a manner that is material to LIFT
and its subsidiaries as a whole, the servicer, General Electric Capital
Corporation or General Electric Company becomes subject to bankruptcy or
insolvency proceedings, there are insufficient funds for the payment of interest
on any Class A Note for a period of 60 days or at least 10 aircraft remain
off-lease but available for re-lease for a period of at least 90 days following
specified events set forth in the indenture.
LIFT may remove the servicer with respect to any affected aircraft if the
servicer has reasonably determined that directions given, or services required,
would, if carried out, place the servicer in a conflict of interest with respect
to which, in the servicer's good faith opinion, the servicer could not continue
to perform its obligations under the servicing agreement with respect to that
aircraft.
The servicer may not resign or be removed under the servicing agreement and
the servicing agreement may not be terminated, except as described above and
unless a replacement servicer, has been appointed and LIFT has obtained a
confirmation from the rating agencies rating the notes that they will not lower,
qualify or withdraw any rating as a result. If a replacement servicer has not
been appointed within 90 days after notice of any termination, resignation or
removal, the servicer may petition any court of competent jurisdiction to
appoint a replacement servicer. The servicer may terminate the servicing
agreement, whether or not a replacement servicer has been appointed, if LIFT
fails, after the applicable cure periods, to pay amounts due to the servicer.
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COMPETITION
In leasing and selling aircraft in its portfolio, LIFT faces competition
from a variety of entities. These include:
(1) aircraft manufacturers, such as Boeing and Airbus;
(2) financial institutions engaged in the leasing business and other
leasing companies;
(3) banks and other financial institutions that have foreclosed on
aircraft collateral;
(4) airlines which are disposing of excess aircraft; and
(5) other aircraft portfolio entities formed for purposes similar to
those of LIFT.
Many if not most of these entities have greater resources, greater financial
flexibility and longer operating histories than LIFT. Please see "The Commercial
Aircraft Industry" for a further discussion of the competitive environment for
the leasing and sale of aircraft.
THE PURCHASE AGREEMENTS
The following is a summary of the material terms of the asset purchase
agreement and the beneficial interest purchase agreement. For more specific
information you should review the actual text of those agreements, copies of
which are included as Exhibit 10.1 and Exhibit 10.7, respectively to the
Registration Statement of which this prospectus is a part.
PURCHASE OF LIFT 1 AND ITS SUBSIDIARIES
On June 26, 2001, LIFT acquired all of the equity interests of LIFT 1 and
its subsidiaries. At the time of that acquisition, LIFT 1 had entered into the
asset purchase agreement described below and had paid the full purchase price
for all the initial aircraft under the asset purchase agreement. As a
consequence of the acquisition of LIFT 1 by LIFT, LIFT 1 became a wholly-owned
subsidiary of LIFT, and all the assets of LIFT 1 and its subsidiaries, including
aircraft delivered and to be delivered under the asset purchase agreement,
became a part of the consolidated assets of LIFT. Accordingly, the discussion
below is from the perspective of LIFT and its subsidiaries.
PURCHASE OF THE AIRCRAFT
As of the date of this prospectus, LIFT and its subsidiaries have taken
delivery of of the 39 initial aircraft. The remaining aircraft are to be
delivered no later than January 22, 2002. The aircraft were acquired by LIFT 1
from General Electric Capital Corporation and its affiliates under an asset
purchase agreement dated as of June 26, 2001. Under the terms of the asset
purchase agreement, the remaining aircraft will be delivered either by sale of
the equity interest in the special purpose entity that holds title to the
aircraft or by transfer of the aircraft directly by General Electric Capital
Corporation and its affiliates to LIFT 1 and other wholly-owned subsidiaries of
LIFT. In accordance with the asset purchase agreement, LIFT 1 paid the aggregate
purchase price for all 39 aircraft on June 26, 2001.
On the delivery date of each remaining aircraft or of the equity interest in
the special purpose entity that holds title to the remaining aircraft, the
seller must represent that it is transferring ownership of the aircraft or the
equity interest in a special purpose entity that holds title to the aircraft
free of all encumbrances other than those created by or through the lessee of
that aircraft or LIFT and its subsidiaries and that all indebtedness of any such
special purpose entity has been discharged. The seller and the purchaser will
also have to satisfy various other conditions unless the party that benefits
from the condition waives it. In the case of a waiver of a condition for the
benefit of a purchaser, LIFT must first obtain a confirmation by the rating
agencies rating the notes that they will not lower, qualify
43
<Page>
or withdraw their ratings on the notes as a result. In case of a transfer of the
equity interests of a special purpose entity that owns an aircraft, General
Electric Capital Corporation will indemnify LIFT and its subsidiaries against
any loss, liability or expense relating to claims against the existing owner
arising with respect to the period prior to the transfer of that entity to LIFT
and its subsidiaries.
In accordance with the asset purchase agreement, the sellers retained all
maintenance reserves that they held under the leases of the aircraft but on
June 26, 2001 transferred to LIFT and its subsidiaries all cash security
deposits that they held under the leases and all rents received before then
under those leases for the period starting June 26, 2001. Pending delivery, LIFT
will, in general, be responsible for all amounts payable by the lessor under the
leases after June 26, 2001 in respect of maintenance payments.
SUBSTITUTE AIRCRAFT
If a seller is unable to deliver any of the remaining initial aircraft
by January 22, 2002 because a condition precedent to delivery contained in the
asset purchase agreement is not met or for any other reason, other than the
destruction or substantial damage to the aircraft, General Electric Capital
Corporation must use reasonable efforts to designate a substitute aircraft for
the undelivered aircraft before January 22, 2002. If an aircraft is destroyed or
substantially damaged, the sellers may identify a substitute aircraft if they so
choose.
A substitute aircraft must satisfy the following requirements:
(1) it is subject to an operating lease contract containing certain core
lease provisions that are set forth in the indenture governing the notes;
(2) delivery of the substitute aircraft will not result in the weighted
average age of all aircraft in LIFT and its subsidiary's portfolio computed as
of June 26, 2001 to exceed 4.39 years;
(3) the substitute aircraft is of the same type as the undelivered
aircraft;
(4) delivery does not result in a default relating to the concentration
of types and locations of aircraft under the indenture governing the notes; and
(5) the rating agencies rating the notes have confirmed that they will
not lower, qualify or withdraw the rating on the notes as a result of that
substitute aircraft.
On the delivery date of a substitute aircraft, adjustment payments may be
made by LIFT and its subsidiaries to General Electric Capital Corporation and
its subsidiaries or vice-versa. These adjustment payments would reflect any
difference between the depreciated value of the undelivered aircraft and an
amount equal to 84.5% of the average of three base value appraisals of the
substitute aircraft as well as differences in rent collected and maintenance
expenses received and paid as to these aircraft. LIFT is then required to repay
promptly to General Electric Capital Corporation any cash security deposits it
then holds for the undelivered aircraft and General Electric Capital Corporation
is required to pay promptly to LIFT the amount of any cash security deposits
General Electric Capital Corporation or the lessor of that substitute aircraft
then holds for that substitute aircraft.
If an aircraft is destroyed or substantially damaged and the seller does not
designate a substitute aircraft in its place, then the seller need not deliver
and the purchaser need not accept delivery of that aircraft. In these cases,
however, the seller must turn over insurance and other proceeds of that loss to
LIFT.
If any required substitute aircraft is not delivered by January 22, 2002 for
any reason, General Electric Capital Corporation is to pay to LIFT on
January 22, 2002 the depreciated value of that aircraft less an adjustment
factor relating to usage of any related maintenance reserves, and LIFT must
return any unused security deposit.
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BANKRUPTCY CONSIDERATIONS RELATING TO "TRUE SALE" ISSUES
If Automatic becomes a debtor in a case under the U.S. Bankruptcy Code, any
creditor, a bankruptcy trustee, the debtor itself or another party in interest
could request the court to re-characterize the transfer by Automatic of the
equity interest of LIFT 1 to LIFT as a financing by Automatic rather than as a
"true sale" to LIFT. If any such request is made, delays in payments on the
notes could result. Should the bankruptcy court rule in favor of such a request,
the court could include the assets transferred to LIFT in the debtor's
bankruptcy estate or take other actions that would be adverse to you and that
could result in delays or reductions in payments on the notes.
On June 26, 2001, Milbank, Tweed, Hadley & McCloy LLP delivered a reasoned
opinion to LIFT that, based on various assumptions and qualifications, in a case
under the U.S. Bankruptcy Code in which Automatic is the debtor, a court
applying federal bankruptcy law and properly presented with the facts and
exercising reasonable discretion would hold that the transfer of LIFT 1 by
Automatic to LIFT is a true sale of the beneficial interests of LIFT 1 and not a
pledge of those beneficial interests by Automatic and that those beneficial
interests are not the property of the bankruptcy estate of Automatic.
The aircraft have been purchased from General Electric Capital Corporation
and some of its affiliates. If General Electric Capital Corporation or any of
the other aircraft sellers becomes a debtor in a case under the U.S. Bankruptcy
Code, any creditor, a bankruptcy trustee, the debtor itself or another party in
interest could request the court to re-characterize the transfer of aircraft or
leases or the equity interests of the special purpose entities that own the
aircraft or hold the leases to LIFT 1 as a financing by the sellers rather than
as a "true sale" to LIFT 1 and further to determine that Automatic and its
affiliates therefore could not have transferred the aircraft or the equity
interests of the special purpose entities that own the aircraft to LIFT. If any
such request is made, delays in payments on the notes could result. Should the
bankruptcy court rule in favor of such a request, the court could include the
assets transferred to Automatic and then to LIFT in the debtor's bankruptcy
estate or take other actions that could result in delays or reductions in
payments on notes and that would otherwise be adverse to you.
On June 26, 2001, Paul, Hastings, Janofsky & Walker LLP delivered a reasoned
opinion to LIFT that, based on various assumptions and qualifications, in a case
under the U.S. Bankruptcy Code in which General Electric Capital Corporation or
any affiliate seller is the debtor, a court applying federal bankruptcy law and
properly presented with the facts and exercising reasonable discretion would
hold that the transfer of the initial aircraft or the related equity interests
by the seller to LIFT 1 is a true sale of those aircraft or related equity
interests and not a pledge of those aircraft and interests by the sellers and
that those aircraft and interests are not the property of the bankruptcy estate
of the sellers.
The above opinions note, however, that there is no case law directly on
point, that a court may decide differently from the views expressed in the
opinion and that each opinion represents only counsel's best judgment and is not
binding in the courts. Moreover, each opinion states that it depends on the
accuracy of many factual assumptions that the counsel has not independently
verified and that different facts could lead a court to reach a different
conclusion.
APPRAISERS' REPORT
Three independent appraisers, Aircraft Information Services, Inc., BK
Associates, Inc. and Morten Beyer & Agnew, Inc., provided appraisals of the
value of each of the initial aircraft as of December 31, 2000. The appraisals
assume that initial aircraft are utilized normally in an open, unrestricted and
stable market, adjusted where necessary to account for the reported maintenance
standard of the aircraft. Values calculated under these assumptions are "base
values". Copies of the appraisals are included in Appendix 10. The appraisals
were not based on a physical inspection of the aircraft. The appraisals explain
the methodology used by the appraisers.
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<Page>
Based on the appraisals, the average of the aggregate base values calculated
by the appraisers for the initial aircraft as of December 31, 2000 is
$1,551,491,333. The base values of the initial aircraft as of December 31, 2000
are listed below by type and class of aircraft. You should not rely upon these
base values as a measure of the market or realizable value of any initial
aircraft. In addition, the base values of the aircraft are expected to decline
over time due to the aging of the aircraft, increasing maintenance expenses and
similar factors. The appraisals listed below were conducted as of December 31,
2000, and the base values of the aircraft, if determined as of June 13, 2001, on
the date of this prospectus or on the delivery dates of the aircraft, would be
expected to be lower than the base values in the appraisals.
The appraised base values obtained and to be obtained in the future assume
an "open, unrestricted stable market environment with a reasonable balance of
supply and demand" and other factors common for like appraisals. At any point in
the aircraft leasing cycle, however, there will be imbalances of aircraft supply
and demand and there may be particularly pronounced imbalances for specific
aircraft types. Although some initial aircraft may have market values
approximating or exceeding the appraised values given them, others, such as the
older aircraft or aircraft that are no longer in production, may have market
values below, and in some cases significantly below, those appraised base
values. At a cyclical low, the market value of most aircraft types is likely to
be less than, and in some cases significantly less than, the appraised base
values. In addition, the appraised base values of the initial aircraft will
likely decline over time due to aging, increasing maintenance expenses and
similar factors. Finally, appraised base values obtained upon delivery of the
aircraft would be expected to be less than the initial appraised values, which
were determined as of December 31, 2000. Accordingly, you should not place undue
reliance on the indicated appraised values as an accurate depiction of current
market or realizable values at any one point in time, and you should realize
that actual current market or realizable values at any point in time may be
substantially less than appraisal values.
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PORTFOLIO INFORMATION
THE INITIAL AIRCRAFT
All of the initial aircraft hold a noise certificate issued under Chapter 3
of Volume I, Part II of Annex 16 of the Chicago Convention or have been shown to
comply with the Stage 3 noise levels set out in Section 36.5 of Appendix C of
Part 36 of the United States Federal Aviation Regulations.
The following table identifies the initial 39 aircraft by type of aircraft.
<Table>
<Caption>
% OF TOTAL
TYPE OF NUMBER OF APPRAISED VALUE AS OF
MANUFACTURER AIRCRAFT AIRCRAFT BODY TYPE DECEMBER 31, 2000
------------ ----------- --------- ----------- ---------------------
Boeing................................ B767-300ER 5 Widebody 26.50%
Boeing................................ B737-300 10 Narrowbody 18.85%
McDonnell Douglas..................... MD82 9 Narrowbody 11.00%
Airbus................................ A320-200 4 Narrowbody 10.96%
Boeing................................ B747-400 1 Widebody 9.13%
Boeing................................ B737-800 3 Narrowbody 8.37%
McDonnell Douglas..................... MD11F 1 Freighter 4.83%
Boeing................................ B737-700 2 Narrowbody 4.56%
Boeing................................ B737-400 2 Narrowbody 2.88%
Boeing................................ B737-500 1 Narrowbody 1.71%
McDonnell Douglas..................... MD83 1 Narrowbody 1.21%
-- ------
TOTAL............................... 39 100.00%
</Table>
The following table lists the countries in which the initial 39 aircraft are
based.
<Table>
<Caption>
% OF TOTAL
NUMBER OF APPRAISED VALUE AS OF
COUNTRY AIRCRAFT DECEMBER 31, 2000
------- --------- ---------------------
United Kingdom.............................................. 4* 12.32%
Canada...................................................... 2 11.06%
China....................................................... 5 9.20%
Malaysia.................................................... 1 9.13%
Spain....................................................... 6 8.59%
United States............................................... 3 6.39%
South Korea................................................. 2 6.29%
France...................................................... 3 6.10%
Brazil...................................................... 3 5.87%
Turkey...................................................... 2 5.63%
Russia...................................................... 1 5.49%
Italy....................................................... 1 2.86%
Morocco..................................................... 1 2.74%
India....................................................... 1 2.35%
Portugal.................................................... 1 2.04%
Tunisia..................................................... 1 1.47%
Indonesia................................................... 1 1.42%
Off-Lease................................................... 1 1.05%
-- -------
TOTAL..................................................... 39 100.00%
</Table>
------------------------
* Includes the easyJet Airline Co. Ltd. aircraft.
47
<Page>
The following table identifies the regions in which the initial 39 aircraft
are based.
<Table>
<Caption>
% OF TOTAL
NUMBER OF APPRAISED VALUE AS OF
AIRCRAFT DECEMBER 31, 2000
--------- ---------------------
DEVELOPED REGIONS
Europe--Developed......................................... 15 31.91%
North America--Developed.................................. 5 17.45%
-- ------
Total Developed Regions..................................... 20 49.36%
EMERGING REGIONS
Asia--Emerging............................................ 10 28.39%
Africa, Europe & Other--Emerging.......................... 5 15.33%
Latin America--Emerging................................... 3 5.87%
-- ------
Total Emerging Regions...................................... 18 49.59%
Off-Lease................................................... 1 1.05%
-- ------
TOTAL..................................................... 39 100.00%
</Table>
The following table identifies the current lessees of the initial 39
aircraft.
<Table>
<Caption>
% OF TOTAL BY
NUMBER OF APPRAISED VALUE AS OF
LEASE AIRCRAFT DECEMBER 31, 2000
----- --------- ---------------------
Air Canada Capital Ltd...................................... 2* 11.06%
China Eastern Airlines...................................... 5 9.20%
Malaysian Airline System Berhad............................. 1 9.13%
Societe Air France.......................................... 3 6.10%
Spanair S.A................................................. 5 5.98%
Air 2000 Limited 1 5.73%
Pegasus Hava Tasimaciligi A.S............................... 2 5.63%
Aeroflot--Russian International Airlines.................... 1 5.49%
Korean Airlines............................................. 1 4.83%
Go Fly Limited.............................................. 2 4.41%
American Airlines........................................... 1** 4.22%
VARIG S.A................................................... 2 4.16%
Volare Airlines SpA......................................... 1 2.86%
Royal Air Maroc............................................. 1 2.74%
Iberworld Airlines, S.A..................................... 1 2.61%
Jet Airways................................................. 1 2.35%
easyJet Airline Co. Ltd..................................... 1*** 2.18%
SATA-Air Acores............................................. 1**** 2.04%
Rio Sul, Servicos Aereos Regionais S.A...................... 1 1.71%
Nouvelair Tunisie........................................... 1 1.47%
Asiana Airlines............................................. 1 1.46%
P.T. Garuda Indonesia....................................... 1 1.42%
Delta Air Lines............................................. 1 1.09%
America West Airlines....................................... 1 1.08%
Off-Lease................................................... 1 1.05%
-- ------
TOTAL..................................................... 39 100.00%
</Table>
------------------------
* Aircraft currently on sublease to Air Canada.
** Aircraft currently on lease to TWA Airlines LLC, a wholly-owned subsidiary
of American Airlines.
*** Aircraft currently on sublease to easyJet Switzerland S.A.
****Aircraft currently on sublease to SATA International Servico Acoreano de
Transporte Aereos, S.A.
48
<Page>
The following table identifies the aircraft by year of aircraft manufacture.
The weighted average age of the initial 39 aircraft as of June 13, 2001 is
approximately 4.39 years.
<Table>
<Caption>
% OF TOTAL
YEAR OF NUMBER OF APPRAISED VALUE AS OF
MANUFACTURE AIRCRAFT DECEMBER 31, 2000
----------- --------- ---------------------
1986........................................................ 1 1.09%
1987........................................................ 4 4.36%
1988........................................................ 1 1.21%
1989........................................................ 3 4.11%
1990........................................................ 4 5.02%
1991........................................................ -- --%
1992........................................................ 1 4.83%
1993........................................................ 1 1.47%
1994........................................................ 1 4.22%
1995........................................................ -- --%
1996........................................................ -- --%
1997........................................................ 2 3.66%
1998........................................................ 7 22.09%
1999........................................................ 11 36.45%
2000........................................................ 3 11.49%
2001........................................................ -- --%
----- ------
TOTAL................................................. 39 100.00%
===== ======
</Table>
49
<Page>
Further particulars of the initial 39 aircraft are contained in the table
below:
<Table>
<Caption>
COUNTRY IN WHICH
ORIGINAL LESSEE AIRCRAFT ENGINE SERIAL DATE OF
REGION IS BASED INITIAL LESSEE TYPE CONFIGURATION NUMBER MANUFACTURE
------ ---------------- ---------------- ----------- ------------- -------- ------------
Europe--Developed............ United Kingdom Air 2000 B767-300ER CF6-80C2-B7F 29618 May 2000
France Air France B737-300 CFM56-3C1 28672 Jan 1998
France Air France B737-300 CFM56-3C1 28673 Feb 1998
France Air France B737-300 CFM56-3C1 28569 Feb 1998
United Kingdom easyJet Airline B737-300 CFM56-3C1 29338 Jul 1999
United Kingdom Go Fly Limited B737-300 CFM56-3C1 28602 Aug 1999
United Kingdom Go Fly Limited B737-300 CFM56-3C1 28606 Oct 1999
Spain Iberworld A320-200 CFM56-5B4 879 Dec 1998
Portugal SATA-
AIR Acores B737-300 CFM56-3C1 28570 Mar 1998
Spain Spanair MD82 JT8D-217A 49501 Oct 1987
Spain Spanair MD82 JT8D-217A 49509 Aug 1989
Spain Spanair MD82 JT8D-217A 49519 Dec 1990
Spain Spanair MD83 JT8D-219 49578 Mar 1988
Spain Spanair MD82 JT8D-217A 49507 Oct 1987
Italy Volare A320-200 CFM56-5B4 1152 Feb 2000
North America--Developed..... Canada Air Canada* B767-300ER CF6-80C2-B6F 30108 Nov 1999
Canada Air Canada* B767-300ER CF6-80C2-B6F 30112 Sep 1999
United States America West B737-300 CFM56-3B2 23384 Aug 1987
United States American
Airlines** B767-300ER PW4060 26208 Sep 1994
United States Delta Air Lines B737-300 CFM56-3B2 23376 Nov 1986
Asia--Emerging............... South Korea Asiana Airlines B737-400 CFM56-3C1 24469 Jul 1989
China China Eastern MD82 JT8D-217A 49513 Apr 1990
China China Eastern MD82 JT8D-217A 49515 Oct 1990
China China Eastern MD82 JT8D-217A 49511 Mar 1990
China China Eastern A320-200 CFM56-5B4 1093 Oct 1999
China China Eastern A320-200 CFM56-5B4 1108 Nov 1999
Indonesia Garuda Indonesia B737-400 CFM56-3C1 24512 Sep 1989
India Jet Airways B737-700 CFM56-7B24 28609 Nov 1999
South Korea Korean Airlines MD11F PW4460 48523 Sep 1992
Malaysia Malaysian
Airlines System B747-400 PW4056 28427 Mar 1998
Africa, Europe & Other--
Emerging................... Russia Aeroflot B767-300ER CF6-80C2-B7F 30110 Dec 1999
Tunisia Nouvelair
Tunisie MD82 JT8D-217C 53147 Aug 1993
Turkey Pegasus B737-800 CFM56-7B26 28591 Apr 1999
Turkey Pegasus B737-800 CFM56-7B26 28628 Jun 2000
Morocco Royal Air Maroc B737-800 CFM56-7B26 28592 May 1999
Latin America--Emerging...... Brazil Rio Sul B737-500 CFM56-3C1 28565 Nov 1997
Brazil VARIG B737-300 CFM56-3C1 28671 Nov 1997
Brazil VARIG B737-700 CFM56-7B24 28584 Dec 1998
Off-Lease.................... Off-Lease Off-Lease MD82 JT8D-217A 49419 Aug 1987
TOTAL..................
<Caption>
INITIAL
APPRAISED
VALUE
REGION ($US 000,000S)
------ --------------
Europe--Developed............ 88.898
31.697
31.347
31.598
33.857
34.140
34.297
40.486
31.577
17.493
19.057
20.317
18.777
17.133
44.325
North America--Developed..... 86.253
85.323
16.823
65.467
16.847
Asia--Emerging............... 22.603
19.040
19.278
19.170
42.573
42.713
22.090
36.413
75.000
141.867
Africa, Europe & Other--
Emerging................... 85.103
22.773
42.427
45.066
42.443
Latin America--Emerging...... 26.477
30.183
34.323
Off-Lease.................... 16.237
---------
TOTAL.................. 1,551.491
=========
</Table>
----------------------------------
* Aircraft currently on lease to Air Canada Capital Ltd., a wholly-owned
subsidiary of Air Canada.
** Aircraft currently on lease to TWA Airlines LLC, a wholly-owned subsidiary
of American Airlines.
50
<Page>
ACQUISITION OF ADDITIONAL AIRCRAFT
LIFT and its subsidiaries may acquire additional commercial passenger or
freight aircraft from Automatic, General Electric Capital Corporation and their
respective affiliates. Any rental income and other cash flows from these
additional aircraft will be available to pay the notes and LIFT's other
obligations. Any acquisition of additional aircraft and the related issuance of
additional notes will require confirmation by the rating agencies rating the
notes that they will not lower, qualify or withdraw their ratings on the notes
as a result. There is no limit on the total number or value of additional
aircraft that may be acquired or on when additional aircraft may be acquired.
INITIAL LEASES
The following description relates to the leases for the initial aircraft in
effect on June 26, 2001. Any leases of substitute aircraft, any leases of
additional aircraft and any future leases entered into for the re-lease of any
initial aircraft may differ from the description provided below.
MANAGEMENT, LEASE TERMS, RISK OF LOSS
All leases of the aircraft are being managed by the servicer under the
servicing agreement. All of the leases for the initial aircraft are operating
leases under which the lessor retains the benefit, and bears the risk, of
re-leasing and the residual value of the aircraft upon expiry or early
termination of the lease. Under those leases, the lessees agreed to lease the
aircraft for a fixed term, although in some cases the lessees have purchase
options, termination rights and extension rights. Although most of the lease
documentation for the initial aircraft is fairly standardized in many respects,
significant variations do exist as a result of lessee negotiation.
LEASE PAYMENTS AND SECURITY
Each lease for an initial aircraft requires the lessee to pay periodic
rentals during the lease term. Most of the rental payments are payable on a
fixed rate basis and are not adjustable by reference to market interest rate
changes. Rentals under most of the leases for the initial aircraft are payable
monthly in advance.
A number of the leases require the lessee to pay periodic amounts as
maintenance reserves or similar payments.
With some exceptions, the lessees are required to make payments without
withholding payment on account of any amounts the lessor may owe the lessee or
any claims the lessee may have against the lessor for any breach of contract.
With some exceptions, each lease includes an obligation of the lessee to
gross-up payments under the lease where lease payments are subject to
withholdings and other taxes, although there may be a number of limitations to
the gross-up obligation and often the gross-up amount will be limited to the
amount that would have been payable if such lease had never been transferred to
LIFT or its subsidiary. In addition, changes in law may result in the imposition
of withholding and other taxes and charges that are not reimbursable by the
lessee under the lease or that cannot be so reimbursed under applicable law and
lessees may fail to reimburse even when obligated under the lease to do so. The
leases for the initial aircraft also require the lessee to indemnify the lessor
for some tax liabilities including, in some leases, value added tax and stamp
duties, but generally excluding income tax or its equivalent imposed on the
lessor. The lessees must also pay default interest on any overdue amounts.
Under the leases for the initial aircraft, the lessee must pay operating
expenses accrued or payable during the term of the lease, which would normally
include maintenance, operating, overhaul, airport and navigation charges,
certain taxes, licenses, consents and approvals, aircraft registration and hull
"all
51
<Page>
risks" and public liability insurance premiums. The lessees are obliged to
remove liens on the aircraft other than liens permitted under the leases.
As of June 26, 2001, lessees under 32 of the leases for the initial aircraft
representing 78.09% of the aircraft by aggregate initial appraised value had
provided either or both cash security deposits and letters of credit to secure
its obligations.
OPERATION OF THE INITIAL AIRCRAFT
The leases require the lessees to operate the aircraft in compliance with
all applicable laws and regulations. The initial aircraft generally must remain
in the possession of the lessees, and in many cases any subleases of the
aircraft must be approved by the lessor. In other cases, the lessee may have
broad subleasing rights with re-registration rights. Under most of the leases,
the lessee may enter into charter or other arrangements for the aircraft without
the consent of the lessor if the lessee does not part with operational control
of the aircraft. When there is a sublease, wet lease or charter, the lessee
remains fully liable to the lessor for all of its payment and performance
obligations under the lease. Generally, the lessees are not allowed to
re-register the Aircraft without the lessor's permission, except in connection
with a permitted sublease.
All of the leases for the initial aircraft permit the lessees to remove or
replace the engines and in some cases other equipment or components. Under most
of the leases, lessees are allowed to enter into pooling arrangements for the
temporary borrowing of equipment, in many cases without the lessor's consent.
Under all of the leases, the lessees may deliver the aircraft, engines and other
equipment or components to their manufacturer for testing or similar purposes,
or to other parties for service, maintenance, repair or other work required or
permitted under the lease. The lessor's ability to repossess the aircraft or
engines, equipment or components from any lessee, sublessee, transferee,
manufacturer or other person may be restricted by liens or similar rights and by
applicable bankruptcy and similar laws, by legal or practical impediments to the
enforcement of the right of repossession or other remedies in local courts and
by requirements for de-registration of an aircraft from the registry of, or for
export of an aircraft from, the country in which the lessee, or other person
having possession of the aircraft, or its operations are located.
MAINTENANCE AND MAINTENANCE RESERVES
The leases for the aircraft contain provisions specifying maintenance
standards and the required condition of the aircraft upon redelivery to the
lessor. In addition, under various leases, depending on the condition of the
aircraft including the airframe, engines, the auxiliary power unit or landing
gear at redelivery, the lessee may have to make adjustment payments to the
lessor. Likewise, under various leases, depending on the condition of the
aircraft at redelivery, the lessor may have to make adjustment payments to the
lessee. During the term of each lease, the lessee must ensure that the aircraft
is maintained in accordance with the maintenance program designed to provide
that the aircraft meets applicable airworthiness and other regulatory
requirements. Under the leases for the initial aircraft, maintenance is
generally permitted to be performed by the lessee or, for many of the regional
lessees, by a designated airline or other air authority approved maintenance
provider. Under certain leases for the initial aircraft, the lessee must pay
monthly maintenance reserves. In many cases where the lessee has paid
maintenance reserves or similar amounts, those payments will be used to
reimburse the lessee for significant maintenance charges, including major
airframe and engine overhauls.
Many of the leases for the initial aircraft do not require maintenance
reserves or similar amounts to be paid. In those cases the lessor must rely on
the credit of the lessee or any credit support the lessee provides to ensure
that the lessee returns the aircraft in the condition required by the lease upon
termination, makes any payments required based on the aircraft's return
condition upon termination of the lease and performs scheduled maintenance
throughout the lease term.
52
<Page>
The leases for the initial aircraft require the lessees to comply with the
airworthiness directives of the relevant aviation authorities and with mandatory
manufacturers' service bulletins. In most cases, the lessees share the cost of
compliance. Many of the leases, however, require the lessor to contribute to the
cost of compliance with certain airworthiness directives or manufacturers'
service bulletins if compliance costs are above a specified threshold.
LESSEES' OPTIONS
The leases or side agreements between the lessor and the lessee for five of
the initial aircraft, representing 15.17% of the appraised value of the initial
aircraft, grant purchase options to the lessee or its affiliates. None of the
purchase options are exercisable as of the closing date. The latest date on
which a purchase option may be exercised is February 19, 2011 for a purchase on
November 15, 2011. If a purchase option is exercised and these notes have been
repaid in accordance with the assumptions set forth under "Note Payment
Assumptions", through the date of exercise the exercise of that purchase option
would result in the proceeds realized from the exercise being at least equal to
the principal of the notes allocable to the relevant aircraft. If the notes have
not been so paid, this might not be the case.
Fifteen of the 38 initial leases for the initial 39 aircraft give the lessee
the option to extend the term of the lease. The rent payable during the
extension period may vary from the rent payable prior to the extension. Eight of
the leases allow the lessee to terminate its lease prior to the scheduled
expiration date.
INDEMNIFICATION AND INSURANCE OF THE AIRCRAFT
INSURANCE REQUIREMENTS
The leases for the initial aircraft require the lessees to bear
responsibility and carry insurance for any liabilities arising out of the
operation of the aircraft. These include any liabilities for death or injury to
persons and damage to property that would ordinarily attach to the operator of
the aircraft, subject to customary exclusions. In addition, the lessees must
carry other types of insurance that are customary in the air transportation
industry. These include aircraft hull risk insurance at a value stipulated in
the lease and hull war risks insurance and aircraft spares insurance, in each
case subject to customary terms and deductibles. The servicer must monitor the
lessees' compliance with the insurance provisions of the leases.
In addition, LIFT and its subsidiaries also have in place their own
contingent liability coverage. That coverage covers both a liability that
exceeds the coverage provided by a lessee's policy and instances in which a
lessee's policy lapses for any reason. LIFT and its subsidiaries' contingent
third-party liability insurance covers all of the aircraft, and their contingent
hull and hull war risks insurance covers some of the aircraft. The amount of
third-party contingent liability compliance insurance is subject to limitations
imposed by the air transportation insurance industry.
If any of the existing insurance policies are canceled or terminated and if
an aircraft is re-leased, the servicer may from time to time engage insurance
experts at LIFT's expense to advise and recommend the appropriate amount of
insurance coverage LIFT should procure.
LIABILITY INSURANCE
The leases for the initial aircraft require third party liability insurance
for a combined single limit for bodily injury and property damage in minimum
amounts ranging between $500 million and $750 million for each aircraft. In
general, liability coverage on each aircraft includes third party legal
liability, passenger legal liability, baggage legal liability, cargo legal
liability, mail and aviation general third party and, in many cases, products
legal liability.
53
<Page>
In some jurisdictions, LIFT or its subsidiary, as owner of an aircraft, may
be liable for obligations even if LIFT or that subsidiary is not responsible for
the loss that results in the obligation. In addition, claims may be made against
LIFT or its subsidiary on the basis of alleged responsibility for a loss, even
if such claim is not ultimately sustained.
The losses for which coverage is provided include both operating costs
relating to the actual operation of the aircraft as well as losses to persons
and property resulting from the operation of the aircraft. The latter types of
losses are generally covered by the lessees' liability insurance.
AIRCRAFT PROPERTY INSURANCE
In addition to hull risk, hull war and allied peril risk and aircraft spares
insurance coverage obtained by the lessees, LIFT will also purchase "total loss
only" coverage with respect to some initial aircraft. As of June 13, 2001, in no
case was the sum of the stipulated loss value and LIFT's additional coverage for
hull all risks, hull war and allied peril and all risks insurance less than 95%
of the initial appraised value of the applicable aircraft. The average, weighted
by initial appraised value, of the sum of those coverages in place for each
initial aircraft was approximately 103.5% of the initial appraised value of the
applicable aircraft. In some cases, the lessor is allowed to increase the
insured value above the stipulated loss value consistent with industry practice.
The leases for the initial aircraft include provisions defining an event of
loss or a casualty occurrence so that upon total loss of the airframe, with or
without loss of the engines, an agreed value is payable by the lessee. This
payment is generally funded with insurance proceeds. The air transportation
insurance industry practice, however, is to treat only a loss with likely repair
costs of greater than 75% of the insured value of the aircraft, including the
engines, as a total loss. Where insurance proceeds exceed the cost of repair or
the amount required to be insured under the lease, most leases require the
lessor to pay to the lessee the balance of the insurance proceeds received under
the hull all risks or war risks policy unless an event of default under the
lease exists.
The lessee or sublessee, as applicable, pays for the value stipulated in the
applicable lease in the event of loss or a casualty where a total loss of
airframe occurs with or without loss of the engines installed on the airframe.
In such a case, the lessee or sublessee, as applicable, is responsible for
paying the difference, if any, between the insurance proceeds and the stipulated
loss value stated in the applicable lease. Where insurance proceeds do cover a
total loss, most leases require LIFT or its subsidiaries, to pay to the lessee
the balance of the insurance proceeds received under the hull all risks or war
risks policy unless an event of default under the lease exists.
In the case that an event of loss or a casualty is not deemed a total loss,
most of the leases require LIFT or its subsidiaries, as applicable, to pay the
lessee the balance of insurance proceeds in excess of the cost of repair stated
in the applicable lease unless an event of default under the lease exists.
All insurance policies currently in place contain a breach of warranty
endorsement so that the additional insureds continue to be protected even if the
lessee violates one or more of the provisions of the insurance policies. In many
cases, these endorsements also provide that this protection will only apply if
the additional insured has not caused, contributed to or knowingly condoned the
breach.
An insurance advisor has confirmed to the servicer that the insurance
currently detailed in the current insurance certificates as to the initial
aircraft meets customary practices.
Generally, the leases for the initial aircraft require the lessee to
maintain as part of its hull war and allied perils insurance coverage for loss
or damage resulting from a governmental confiscation or requisition of the
applicable aircraft. In some countries, however, such as France and China, that
kind of insurance may not be obtainable by the lessee.
54
<Page>
DEDUCTIBLES; SELF INSURANCE
Permitted deductibles in respect of the insurance required to be maintained
by the lessees generally range from $100,000 to $1,000,000. General Electric
Capital Corporation and its affiliates have agreements with some lessees to
raise the permitted deductible to $3,000,000, and in other leases the permitted
deductible is stated to be the industry standard amount. There is discussion
ongoing in some aviation markets regarding the possibility of increasing market
deductibles. The deductible generally applies only in the case of a partial
loss. Some lessees also have self-insurance rights which have the effect of
increasing the permitted deductible amounts.
THE LESSEES
As of the date of this prospectus, there were 24 lessees under leases for
the initial aircraft in 17 different countries. As of the date of this
prospectus, one aircraft is off-lease.
PAYMENT HISTORY
As a general matter, weakly capitalized airlines are more likely than well
capitalized airlines to seek operating leases. You should expect varying numbers
of lessees at any point in time to be experiencing payment difficulties.
The servicer has advised LIFT that in the servicer's experience some of the
lessees of aircraft in the portfolio and some other operating lessees of
aircraft similar to the aircraft owned by LIFT and its affiliates have failed
and will likely fail to make timely lease, maintenance and other payments from
time to time over the course of their leases. Many of LIFT's existing lessees
are in a weak financial position, and this is likely to be the case with future
aircraft lessees as well. In a portfolio the size of LIFT's, you should expect
that some aircraft lessees from time to time, and possibly in the near future,
will be slow in paying or will fail to pay in full. In some instances, late
payments are recovered, together with default interest or other similar payments
required by the leases. In other instances, the financial difficulties of a
portfolio's lessees may result in a formal or informal restructuring.
Restructurings may involve the voluntary termination of a lease prior to its
expiration and the arrangement of subleases from the lessee to another aircraft
operator and the failure to recover all or any past due amounts. In addition,
restructurings may involve reduced rental payments for a specified period of
time, which may be several years.
LIFT cannot assure you that the monthly rent information is indicative of
the rates that LIFT and its subsidiaries will experience or of the results that
the servicer will achieve for the re-leasing of the aircraft owned by LIFT and
its subsidiaries. Lease rates are dependent on a number of factors, many of
which are beyond the control of the servicer and LIFT and its subsidiaries. See
"LIFT--Business of LIFT--Difficulties in Re-Leasing or Selling Aircraft at
Favorable Terms." The servicer has not guaranteed, or otherwise provided any
assurances, that the aircraft owned by LIFT and its subsidiaries can be timely
re-leased, that favorable rates that can be achieved in any re-leasing of or
that the performance of any leases will be satisfactory. With respect to the
current lessees, recently several lessees have been slow in making lease
payments from time to time, and recently restructurings have been worked out
with two lessees involving three aircraft. One of these lessees recently made a
request for a two-month rental deferral with respect to several aircraft
including two of the initial aircraft, and lease amendments regarding those
aircraft are being negotiated. You should expect that future restructurings with
at least some of the foregoing lessees will occur. In addition to
restructurings, agreements recently have been entered into with some lessees in
the portfolio granting rental reductions in return for other benefits to the
lessor, such as a lease extension. One of these lessees recently made a request
for further rental reductions which may apply to some of the initial aircraft.
You should expect that future rental reductions of this type will occur.
55
<Page>
DESCRIPTION OF THE INITIAL LESSEES
The table below lists publicly available information with respect to the
country of domicile, first year of operation, service type, nature of ownership
and fleet size and composition of each lessee of the initial 39 aircraft.
<Table>
<Caption>
BEGAN
LESSEE DOMICILE OPERATIONS SERVICE TYPE LESSEE OWNERSHIP OPERATING FLEET
------ ------------ ---------- ------------ ---------------- ---------------
Aeroflot Russian Airlines Russia 1992 Scheduled & Freight Government of Russia 11 A310-30
(51.17%).
Institutional investors 10 B737-400
(48.83%). Joint 4 B767-300ER
Stock Company. 2 B777-200ER
1 DC-10-30F
12 Ilyushin 62M
11 Ilyushin 76
14 Ilyushin 86
7 Ilyushin 96
11 Tupolev 134
21 Tupolev 154
1 Tupolev Tu-204
---
105
===
Air 2000 UK 1986 Charter First Choice Holidays 5 A320-200
PLC (100%). 5 A321-200
16 B757-200
4 B767-300ER
---
30
===
Air Canada Canada 1937 Scheduled & Freight Institutions (70%). Retail 35 A319-100
(19%). Employees (11%). 47 A320-200
Over 65,000 private 5 A330-300
shareholders. Publicly 12 A340-300
Listed Company. 17 DC-9-32
42 B737-200/200C
4 B747-400
3 B747-400 Combi
21 B767-200/
200EM/200ER
29 B767-300ER
25 Canadair CRJ
---
240
===
Air France France 1933 Scheduled & Freight Groupe Air France SA 5 A310-200
(State Owned) (62%). 4 A310-300
Unspecified Investors 30 A319-100
(27%) 60 A320-100/200
Airline Employees (11%) 15 A321-100/200
21 A340-300
5 B737-200
9 B737-300
27 B737-500
2 B747-200B
8 B747-200B Combi
2 B747-200B
Combi (SUD)
9 B747-200F
2 B747-200SF
2 B747-300 Combi
7 B747-400
5 B747-400 Combi
5 B767-300ER
18 B777-200ER
---
236
===
America West Airlines USA 1981 Scheduled Texas Pacific Group (50%). 23 A319-100
Unspecified Investors (42%). 44 A320-200
America West Holdings Corp 14 B737-200
(8%)(Ticker: AWA) 45 B737-300
2 B737-300C
13 B757-200
---
141
===
<Caption>
LESSEE ON ORDER
------ --------
Aeroflot Russian Airlines 25 Ilyushin 96
---
25
===
Air 2000 5 A320-200
1 A321-200
---
6
===
Air Canada 13 A319-100
3 A320-200
12 A321-200
3 A330-300
5 A340-500
4 B767-300ER
---
40
===
Air France 15 A318-100
15 A319-100
1 A320-200
8 A321-100/200
11 A330-200
8 A330-300
2 B747-400LRF
7 B777-200ER
10 B777-300ER
---
77
===
America West Airlines 15 A318-100
10 A319-100
10 A320-200
---
35
===
</Table>
56
<Page>
<Table>
<Caption>
BEGAN
LESSEE DOMICILE OPERATIONS SERVICE TYPE LESSEE OWNERSHIP OPERATING FLEET
------ ------------ ---------- ------------ ---------------- ---------------
American Airlines USA 1934 Scheduled & Freight AMR Corp., whose common 35 A300-600R
B737-800 stock is publicly traded 58 B727-200
with
B757-200 approximately 22,000 62 B737-800
B767-300ER stockholders (100%). 103 B757-200
B777-200ER (Ticker: AMR) 30 B767-200/200ER
49 B767-300ER
34 B777-200ER
75 Fokker 100
229 MD-82
40 MD-83
3 MD-87
3 MD-90
6 MD-11
---
727 106
===
(TWA Fleet) 20 B717-200
A318-100 27 B757-200
A319-100 2 B767-200EM
B717-200 9 B767-300ER
24 DC-9-31/32
40 MD-82
64 MD-83
---
186
===
Asiana Airlines South 1988 Scheduled & Freight Kumho Group (47.1%). 5 A321-100/200
A321-100/200
Korea Unspecified Investors 22 B737-400
A330-200 (46.9%).Korean Development 3 B737-500
A330-300 Bank (7.2%). Korea 3 B747-400
B747-400F Exchange Bank (1.2%). 5 B747-400 Combi
B777-200ER Cho-Hueng Bank (0.6%). 4 B747-400F
9 B767-300
2 B767-300ER
1 B767-300ERF
1 B777-200ER
---
55
===
China Eastern Airlines China 1988 Scheduled & Freight China Eastern Group 10 A300-600R
A320-200 (61.6%).Unspecified 4 A319-100
Foreign Investors (32.2%). 17 A320-200
Unspecified Investors 5 A340-300
(6.2%).
7 B737-300
3 MD-82
9 MD-90
3 MD-11
3 MD-11F
---
61
===
Delta Air Lines USA 1928 Scheduled & Freight Publicly quoted on New 74 B727-200
B737-800 York Stock Exchange with 54 B737-200
B767-400ER almost 28,000 stockholders 26 B737-300
B777-200ER (including employees) 47 B737-800
(95.4%). Swissair (4.6%). 121 B757-200
(Ticker: DAL) 15 B767-200
28 B767-300
58 B767-300ER
17 B767-400ER
7 B777-200ER
120 MD-88
16 MD-90
15 MD-11
11 Lockheed L-1011
---
609
===
<Caption>
LESSEE ON ORDER
------ --------
American Airlines 56
22
15
13
---
===
(TWA Fleet) 25
20
30
---
75
===
Asiana Airlines 11
3
3
3
8
---
28
===
China Eastern Airlines 2
---
2
===
Delta Air Lines 85
4
6
---
95
===
</Table>
57
<Page>
<Table>
<Caption>
BEGAN
LESSEE DOMICILE OPERATIONS SERVICE TYPE LESSEE OWNERSHIP OPERATING FLEET
------ ------------ ---------- ------------ ---------------- ---------------
easyJet UK & 1995 Scheduled Stelios Haji-Ioannou (32%), 19 B737-300
B737-700
Switzerland Polys Haji-Ioannou (16%), 3 B737-700
Clelia Haji-Ioannou (16%),
Institutional Investors
(25%),
easyJet employees (11%).
---
18
===
Garuda Indonesia Indonesia 194 Scheduled & Freight Government owned (78.6%). 6 A330-300
A330-300
Unspecified Investors 1 A340-300
(21.4%).
B777-200ER
7 B737-300
14 B737-400
5 B737-500
4 B747-200B
3 B747-400
5 DC-10-30
5 Fokker F.28
---
50
===
Go Fly UK 1997 Scheduled British Airways (100%). 15 B737-300
Airline is for sale.
---
15
===
Iberworld Spain 1998 Charter Grupo Viajes Iberia (100%). 1 A310-300
A320-200 5 A320-200
---
6
===
Jet Airways India 1992 Scheduled Tailwinds Ltd (an Isle of 5 ATR 72
72
Man registered company owned 10 B737-400
B737-800
by Naresh Goyal) (100%). 8 B737-700
10 B737-800
---
33
===
Korean Airlines South Korea 1962 Scheduled & Freight Han Jin Group (100%). 18 A300-600/600R
A330-300
3 A330-200
B737-800
11 A330-300
B737-900
11 B737-800
B747-400
1 B747-200B
B747-400F
5 B747-200F
B777-300
2 B747-200SF
1 B747-300 Combi
25 B747-400
1 B747-400 Combi
5 B747-400F
6 B777-200ER
4 B777-300
4 MD-82
2 MD-83
4 MD-11F
1 CASA 212
4 Citation V
10 Fokker 100
1 Gulfstream IV
---
120
===
Malaysia Airlines Malaysia 1937 Scheduled & Freight Malaysian Government 9 A330-300
(29.1%).
B747-400 RHB Capital Nominees 36 B737-400
B777-200ER (Tempatan) Sdn Bhd (26%). 1 B737 BBJ1
Unspecified Investors 2 B747-200SF
(24.3%). Employees (11.5%). 1 B747-300 Combi
Royal Brunei Airlines 15 B747-400
(9.1%).
2 B747-400 Combi
13 B777-200ER
5 Twin Otter 300
10 Fokker 50
---
94
===
<Caption>
LESSEE ON ORDER
------ --------
easyJet 29
---
29
===
Garuda Indonesia 3
6
---
9
===
Go Fly
---
0
===
Iberworld 2
---
2
===
Jet Airways 3 ATR
72
8
---
11
===
Korean Airlines 5
4
16
2
4
2
1
---
33
===
Malaysia Airlines 4
4
---
8
===
</Table>
58
<Page>
<Table>
<Caption>
BEGAN
LESSEE DOMICILE OPERATIONS SERVICE TYPE LESSEE OWNERSHIP
------ ------------ ---------- ------------ ----------------
Nouvelair Tunisie Tunisia 1989 Charter Tunisian Travel Service (55%). 3
SOFIAT (20%). Carte (15%). 3
Marhaba Hotels (10%). 1
---
7
===
Pegasus Airlines Turkey 1990 Charter Yapi Kredit Bank (49%). 1
B737-800
Silkar and Net Holdings (30%). 6
Alper Elichin (21%). 7
---
14
===
Rio Sul Brazil 1976 Scheduled Bradesco Seguros, Fundao 2
Ruben Berta, VARIG and 16
others (100%). 8
15
1
42
Royal Air Maroc Morocco 1953 Scheduled & Freight Government (92.7%). Air 2
B737-700
France (4%). Local 3
B737-800
Institutional
Investors 2
(2%). Iberia (1.3%). 7
6
4
5
1
1
2
33
SATA-Air Acores Portugal 1941 Scheduled & Charter SATA Group (100%). 2
2
1
4
1
---
10
===
Spanair Spain 1986 Scheduled & Charter Tour operator Viajes 2
A320-200
Marsans (51%). SAS 5
Leisure AB (Vingresor) (49%). 13
21
3
3
---
47
===
VARIG Brazil 1927 Scheduled & Freight Ruben Berta Foundation 5
B737-700
(of employees and executives) 2
B737-800
(55.63%). Unspecified 13
B767-300ER
Investors (43.94%). Rio 35
B777-200ER
Grande do Sul State 4
Government (0.43%). 5
6
6
3
16
---
95
===
Volare Airlines Italy 1997 Scheduled & Charter Swiss Group (49.8%), 11
A321-200
Brevitours, Teorema Tours & 1
other investors (50.2%).
---
12
===
<Caption>
LESSEE OPERATING FLEET ON ORDER
------ --------------- --------
Nouvelair Tunisie A320-200
MD-82
MD-83
---
0
===
Pegasus Airlines A320-200 1
B737-400
B737-800
---
1
===
Rio Sul B737-300
B737-500
Embraer
EMB-120
Brasilia
Embraer ERJ-145
Fokker 50
0
Royal Air Maroc ATR 42 1
B737-200 11
B737-200C
B737-400
B737-500
B737-700
B737-800
B747-200B Combi
B747-400
B757-200
12
SATA-Air Acores A310-300
B737-300
B737-400
BAe ATP
Fairchild/
Dornier 228
---
0
===
Spanair A320-200 8
A321-200
MD-82
MD-83
MD-87
B767-300ER
---
8
===
VARIG B727-100C/100F 4
B727-200F 10
B737-200 6
B737-300 6
B737-400
B737-700
B767-200ER
B767-300ER
DC-10-30F
MD-11
---
26
===
Volare Airlines A320-200 1
A321-200
---
1
===
</Table>
59
<Page>
THE COMMERCIAL AIRCRAFT INDUSTRY
The following description of the commercial aircraft industry was prepared
for LIFT by Simat, Helliesen & Eichner, Inc. or "SH&E", an international air
transport consulting firm, relied upon as an expert. See "Experts". Although
LIFT believes the description to be reliable, LIFT has not independently
verified the information contained in the description.
Note: The following comments regarding the commercial aircraft industry
reflect the perceived conditions prior to the September 11, 2001 terrorist
attacks in the United States. On that date, terrorists high-jacked and crashed
four commercial aircraft in the United States, with attendant loss of life,
property damage and economic disruption. As a result, air travel in the United
States was suspended for several days, restrictions have been placed on United
States air travel, airline costs such as aircraft insurance have increased and
passenger demand for air travel has significantly declined.
The on-going effects of the terrorist attacks of September 11, 2001 cannot
be completely assessed at this time. The U.S. and European governments are
considering providing grants, loan guarantees and other forms of financial
assistance to help stabilize the industry. Nevertheless, virtually all airlines,
but particularly those serving the United States, either directly or indirectly,
will likely incur higher costs and generate lower revenues, which would
adversely impact their financial position. Most U.S. carriers have already
announced their intention of furloughing a significant percentage of their
workforce.
Other sectors of the industry will be affected as well. The worsening of the
airline's financial position is likely to result in fewer aircraft orders,
deferrals of existing orders and order cancellations. These changes in the
manufacturers' order positions may cause them to cut production rates and layoff
staff.
Most U.S. airlines and some non-U.S. airlines have already announced their
intention to reduce capacity and ground aircraft. Consequently, SH&E expects
that a number of aircraft will be removed from service over the next few weeks
as airlines reduce their capacity to match the reduced demand. SH&E expects that
the retirement of older, Stage 2 aircraft will be accelerated and that certain
Stage 3 aircraft will also be placed into storage.
The effect of these events will likely also cause a general decline in both
aircraft values and aircraft lease rates.
INTRODUCTION
The purpose of this section is to provide a description of the marketplace
for large commercial jet aircraft(1) with a view towards explaining movements in
the underlying values of those aircraft. Contained within this section, is the
relevant industry background needed to develop a clear understanding of the
market and a description of those factors that affect this market. As with any
market, the commercial aircraft industry can only be understood by viewing the
interaction between the suppliers and consumers--in this case manufacturers and
airlines. Consequently, the first part of this section focuses on the supply
side of the industry with its developing duopoly structure, while the second
half is devoted to the airlines that drive the demand.
It should be noted that this section is not a rigorous quantification of the
variables influencing aircraft value nor can it alone be used for predicting
future values.
------------------------
(1) Large jet aircraft are defined for this purpose as having a capacity of
more than 70 seats together with comparably sized freighter aircraft.
60
<Page>
THE SUPPLY OF COMMERCIAL JET AIRCRAFT
THE STRUCTURE OF THE AIRCRAFT MANUFACTURING INDUSTRY
At the outset of the jet era, the U.S. manufacturers, Boeing, Douglas, and
Convair were the principal manufacturers of the large commercial jet aircraft
operated by the western world's airlines. There was some competition from
European manufacturers, but this competition was limited to a few market
segments. Meanwhile, the substantial market for large commercial transport
aircraft in the Eastern Bloc nations was served almost entirely by manufacturers
in the former Soviet Union.
By the beginning of the seventies, the U.S. manufacturers, with Lockheed
replacing Convair, had established a dominant position worldwide. The principal
European producers by this time had allied themselves as the design and
manufacturing partners of Airbus Industrie, set up to be the marketing and
service company for jointly produced aircraft.(2) In the late sixties, these
companies had identified a market niche for a short/medium range twin-engined
wide-body aircraft at a time when the U.S. manufacturers were heavily committed
to three and four-engined wide-body aircraft. This aircraft, named the Airbus
A300, was developed and initially sold to Air France and Lufthansa in 1974.
Subsequently, over 250 A300 aircraft have been sold to 37 operators. In 1978,
Airbus built upon the A300 success by launching the A310, a shortened version of
the A300 fuselage, with improved wing design, systems and longer range.
During the 1980's, Lockheed ceased manufacturing large commercial jet
aircraft. Airbus continued broadening its product line and developed a new
narrowbody aircraft, the A320, which used more advanced technologies in design
and manufacturing than the traditional methods in which Boeing and Douglas were
heavily invested. Asian manufacturers also began to explore entry into the large
jet aircraft manufacturing industry; however, the Asian manufacturers generally
became risk-sharing partners instead of full-scale producers.
In the 1990's, the worldwide aircraft industry consolidated. Key events
contributing to this consolidation include:
(1) The declaration of bankruptcy in 1995 by the Dutch manufacturer of
narrowbody twinjets, Fokker N.V.
(2) The acquisition of McDonnell Douglas by Boeing in 1997.
(3) The former Soviet Union manufacturers, Tupolev, Ilyushin and
Antonov, unsuccessful attempts to participate effectively in either the
international market or to retain their share of the C.I.S. market.
------------------------
(2) Airbus was founded as a Group of Mutual Financial Interest, or "GIE", under
French Law, a consortium owned by its design and manufacturing partners. Airbus
plans and markets the consortium's products, interfaces with the relevant
governments on their certification and then provides customer support in the
form of training, spare parts and related activities. Under French law Airbus
was not required to publish financial reports and prior to 2000 has not done so.
In 2000, Aerospatiale/Matra, DaimlerChrysler Aerospace and CASA, the French,
German and Spanish firms of Airbus, consolidated their aviation resources into a
single company, the European Aeronautic Defence and Space Company, or "EADS".
EADS together with BAE applied for and received authorization for the
transformation of Airbus Industrie from a GIE into a conventional company known
as Airbus Integrated Company and 80% owned by EADS and 20% by BAE. The final
element of this corporate transformation was completed in July 2001.
61
<Page>
Figure 1, below, shows the industry market share, as measured by the value
of delivered aircraft, from 1970 to a forecast date of 2020. This chart shows
the further consolidation of what was by 1970 already a highly consolidated
market. In fact, in the mid-1970s the number of effective, or equally sized,
competitors(3) was just over three. By the end of 2000 the number of effective
competitors had dropped to two, and the market looks to remain a duopoly for the
foreseeable future. Theory dictates that industry consolidation should be
coupled with higher new aircraft purchase prices and, in turn, higher used
aircraft values. Indeed, in an industry where neither supplier has the
production capacity to service the full demand of the industry one would expect
each supplier to act as a monopolist on that demand beyond the productive
capabilities of its competitor. Interestingly though, to date, this does not
seem to have occurred in the commercial aircraft industry as market
concentration has had little or no correlation with actual aircraft values. A
likely reason is that both new and used commercial jet aircraft are viewed as
comparable alternatives by many airline operators. Thus, the actual market for
larger commercial jet aircraft comprises a duopoly of manufacturers for new
aircraft and a large number of lessors, airline operators and financial
institutions, together with the manufacturers, offering used aircraft.
FIGURE 1
MARKET SHARE OF DOLLAR VALUE OF DELIVERIES (1970-2020)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Percent
<Table>
<Caption>
BOEING MCDONNELL DOUGLAS AIRBUS
1970 77.50% 17.50%
1971 72.50% 22.00%
1972 42.00% 40.00%
1973 46.00% 32.00%
1974 45.80% 30.00% 2.50%
1975 48.00% 29.00% 4.00%
1976 51.00% 21.00% 8.00%
1977 54.00% 17.00% 12.00%
1978 65.20% 16.00% 10.00%
1979 65.00% 19.00% 9.00%
1980 62.50% 16.00% 11.00%
1981 57.50% 20.00% 12.50%
1982 55.00% 12.50% 24.00%
1983 65.20% 12.00% 16.00%
1984 54.00% 13.00% 27.00%
1985 62.50% 15.00% 17.50%
1986 67.00% 17.50% 11.50%
1987 66.50% 17.70% 12.50%
1988 61.00% 18.50% 17.50%
1989 60.50% 13.00% 21.00%
1990 69.00% 12.50% 15.00%
1991 59.00% 17.50% 19.50%
1992 61.00% 16.50% 19.00%
1993 56.00% 13.00% 24.00%
1994 55.50% 9.00% 28.00%
1995 47.50% 11.00% 34.00%
1996 54.00% 10.00% 29.00%
1997 66.50% 28.00%
1998 69.00% 25.50%
1999 65.50% 28.00%
2000 57.00% 33.00%
2001 55.50% 34.00%
2002 52.50% 37.50%
2003 52.00% 39.00%
2004 52.50% 40.00%
2005 54.00% 41.00%
2006 49.00% 47.00%
2007 43.00% 54.00%
2008 40.00% 57.00%
2009 42.50% 55.00%
2010 45.00% 53.00%
2011 44.50% 53.00%
2012 42.00% 55.50%
2013 45.00% 52.50%
2014 43.00% 54.00%
2015 45.50% 52.50%
2016 46.00% 52.00%
2017 46.50% 51.00%
2018 47.00% 51.50%
2019 47.50% 50.00%
2020 47.50% 50.00%
</Table>
SOURCE: AIRLINE MONITOR, JULY 2000
LARGE JET TRANSPORT COMPETITION
Boeing, like McDonnell Douglas, was constrained by its large customer base
and committed to the technology of its current fleets. Boeing was slower than
Airbus to incorporate new technology because, among other reasons, of the need
to retain commonality for its existing customer fleets. Accordingly,
------------------------
(3) As measured by the inverse of the Herfindahl index. The widely used
Herfindahl index measures market concentration by summing the square of each
firm's market share. For example, if two firms each have a 50 percent market
share, the index is 0.50(2) + 0.50(2) = 1/2. Inverting this gives 2 effective
competitors.
62
<Page>
many of Boeing's technological improvements were aimed at reducing operating
costs, improving performance and increasing capacity through new models of its
existing 737, 747, 757 and 767 aircraft.
Boeing introduced only two entirely new aircraft since the 757 and 767
entered into service in 1982. One the 717, which entered service in 1995,
acquired as a result of the merger with McDonnell Douglas, is essentially a
derivative of the DC9, but the second, the long-range wide-body twin-engine 777,
is an entirely new design incorporating "fly-by-wire" technology and was
constructed using computer-based design and manufacturing.
Airbus exploited fly-by-wire technology sooner than Boeing and incorporated
these and other technological development into aircraft families. For example,
it developed a family of narrowbody aircraft of different fuselage lengths based
upon the A320(4), and thereby offered the airlines a variety of aircraft that
obtained meaningful benefits from the resultant commonality. Airbus also
developed two wide-body aircraft, the medium-to-long range A330 and the
long-range A340, both based on the fuselage structure of the A300/310, but using
the fly-by-wire technology and cockpit of the A320. These aircraft exploited
common flight characteristics with the A320 family and thereby reduced
crew-training costs to airlines operating both types(5). Sales of these aircraft
established Airbus as a significant competitor, with the growth of its fleet in
operation worldwide from 552 units in 1990 to 2,661 as of July 1, 2001.
Airbus's success in the last decade has enabled it to increase its share of
deliveries relative to Boeing. Figure 1 shows that, to date, Airbus' growth has
not come at the expense of Boeing but rather the third competitor in the market
place. Since the early 1980's Boeing's market share has continued to fluctuate
around 60 percent while Airbus has steadily been gaining ground. In fact, in
terms of current orders, Airbus has increased its share of orders from
19 percent in 1995 to 53 percent in 2000.(6) As a result, Airbus is forecast by
some analysts to reach parity with Boeing in terms of annual aircraft delivery
within the next five years:
In spite of the more recent relative success of Airbus, Boeing has delivered
many more aircraft than Airbus in the past decade, 2,801 compared to 1,568, and
retains a very large lead in total aircraft in service with over five times the
Airbus market share of aircraft in operation.
THE REGIONAL JET TRANSPORT INDUSTRY
This review is primarily focused upon large jet aircraft, which are those
with 100 or more seats. An important new market segment emerged, however, with
the introduction, in the mid-1990's, of smaller jet aircraft, known as regional
jets.
Regional jets, aircraft carrying 35 to 50 passengers, are displacing
turbo-prop sales, and derivatives are now ordered for 70 seats and planned for
90 seats. They are also changing airline service patterns by permitting
point-to-point service in markets previously too small to be served profitably
with larger jet aircraft or by replacing mainline jets on routes better served
by "right-sized" aircraft. In addition, regional jets are now being used to
expand the reach of hubs and redirect some connecting flows to help alleviate
congestion at the busier hub airports.
The products of the manufacturers of these smaller aircraft, Bombardier,
Embraer and Fairchild(7), are stimulating overall demand for aircraft. They are
also competing with the smallest offerings of
------------------------
(4) Specifically the stretched A321, the shortened A319 and the further
shortened A318.
(5) Boeing also advanced the family concept with the 757/767 program and the
different versions of the 737, i.e., the 300 thru 900.
(6) Airbus Website July 2001.
(7) British Aerospace also produces a larger Regional Jet, the Avro RJ, in two
models, the RJ85 and RJ100, but these have sold in smaller numbers principally
to airlines with either short runway or stringent noise requirements.
63
<Page>
Airbus and Boeing and marginally diverting demand from markets served by larger
aircraft. This diversion may become more intense in the future as the regional
jet manufacturers introduce the larger 70 to 90 seat aircraft that they are
developing. In short, Boeing and Airbus will soon face more vigorous competition
for aircraft in the 100 seat and below market, and in response, Boeing has just
announced plans for a shortened version of the Boeing 717 seating 86 passengers.
It is not expected that such aircraft will displace modern jet transports
such as those in the LIFT portfolio.
THE ECONOMICS OF THE AIRCRAFT MANUFACTURING INDUSTRY
There are very significant barriers to entry in the large aircraft
manufacturing industry. It is characterized by extremely high investment
requirements in research, design, and development. In addition, substantial
investment is needed to build manufacturing facilities and to develop customer
support services. It is a highly regulated industry with the necessity to get
its products certified by regulatory agencies in most countries where the
products are used. Moreover, customers are loyal and reluctant to move to new
"untested" manufacturers, which essentially forces any new entrant to weather a
long incubation period, as did Airbus.
The very high investment requirements of developing a new aircraft type
influence the economics of the industry.(8) It can take many years of production
before the initial development costs are fully amortized. Once these initial
costs on a particular model of aircraft have been fully amortized, however,
further sales usually are highly profitable.(9)
Airline orders for aircraft have historically peaked during periods of
strong relative profitability but, due to the long lead times between the
placement of orders for commercial aircraft and the delivery of those aircraft,
peak deliveries, and thus peak production rates, have often occurred during the
downside of the airline profit cycle. The following chart, Figure 2, below shows
this experience over the past 20 years through two economic cycles. As can be
seen, deliveries dropped by over a third between 1980 and 1983 and by nearly
50 percent between 1991 and 1996.
------------------------
(8) For example, the A380 is estimated to require over $12 billion in
development costs. Source: Airbus/Financial Times. $10.7 Billion was spent on
development as of January 2000 with development still underway. Source: Aviation
Week & Space Technology, January 2000. First AC will enter service in 2006.
Source: Airbus Website
(9) Where two manufacturers are offering similar models, these circumstances
provide motivation for heavy price competition, which is further encouraged by
the substantial expense of changing production rates stemming from the large
fixed cost element of the business and the cost of hiring and laying off of
skilled labor.
64
<Page>
FIGURE 2
AIRCRAFT ORDER AND DELIVERY TRENDS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Aircraft Order delivery Trends
<Table>
<Caption>
ORDERS DELIVERIES
1984 357 327
1985 624 389
1986 686 441
1987 611 489
1988 1026 585
1989 1670 623
1990 901 810
1991 431 942
1992 392 885
1993 338 704
1994 425 501
1995 727 444
1996 1153 456
1997 1348 644
1998 1658 945
1999 1358 1134
2000 1900 1185
</Table>
SOURCE: AIRLINE MONITOR
Manufacturers' attempts to smooth the cycle have not been particularly
successful. At the top of the cycle, competitive pressures arising from the
airlines' demand for early deliveries tend to cause unsustainable production
rates. At the bottom of the cycle, however, attempts to maintain production tend
to create over-capacity in the airline sector, and thereby worsen the cycle,
and, in turn, help cause sharp drops in aircraft values.
Developments in design and manufacturing methods for large aircraft promise
some alleviation of the difficulty manufacturers have had in matching production
to demand. New techniques are both reducing the time to take a new model from
concept to delivery and also the time from order to delivery for existing
models. The use of computer-aided design coupled with computer-aided
manufacturing, referred to collectively as CADCAM, has been the most important
factor in these very significant changes in aircraft manufacture.
Computer-aided design has largely eliminated the traditional drawing board
as a design tool and the drawing as a means of conveying information. Boeing has
used a system called CATIA, which has enabled several critical steps to be taken
simultaneously in the design process. These include the physical fit of one part
with another, the compatibility of materials, the calculation of stress levels
and resultant fatigue life and similar steps that previously were done
sequentially and necessitated iterative changes in the design. CATIA has also
enabled computer instructions to be fed directly to machine tools in the
manufacturing process, reducing setup time and reducing both parts processing
and assembly times. This has not only accelerated the design process, but also
largely eliminated the need for prototype assemblies and subsequent
modifications.
These benefits have not been confined to the manufacturers, who have become
over time largely designers and assemblers, but also of equal importance to the
critical subcontract component manufacturers. Through the use of common CADCAM
programs, the activities of component manufacturers have been coordinated
closely with those of the principal manufacturer, sharply reducing compatibility
errors and similar problems that had typically hampered the production of first
flight test aircraft. As a result the time from an initial decision by a
manufacturer to commit to the production of
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<Page>
a new model to initial delivery, has decreased from what might have been five
years in a typical case to something closer to three years. With this shortened
lead-time, manufacturers therefore can be much more confident of their ability,
when facing commitment to an investment in new model, to make accurate
predictions of demand at time of delivery.
CADCAM and related programs have also substantially reduced the time taken
to produce an individual aircraft. Whereas aircraft have traditionally been
built on a slow moving production line with the manufacturer installing parts
supplied from material storage, now suppliers deliver assembled systems that can
be directly installed in accordance with "just-in-time" logistics programs. In
the case of Airbus, its production line for its latest widebody aircraft
consists of a large, uncrowded facility with limited staffing whose principal
function is to use automated riveting machines to bond together nose, fuselage,
wings and tail.(10)
As a result, manufacturers have moved closer to a "build-to order" system
which in combination with the reduction in time of production required between
order and delivery has somewhat reduced the potential for the production cycle
to be out of balance with airline demand.
THE RELATIONSHIP BETWEEN DEMAND FOR AND SUPPLY OF LARGE JET AIRCRAFT
Aircraft demand as reflected by orders and aircraft supply as measured by
deliveries are each cyclical and are correlated with the profitability of the
airline industry, which is also cyclical.
Historically, there has also been a close correlation between air travel and
general economic conditions. As a result, forecasts for aircraft demand
typically start from forecasts of world economic conditions by region, which are
then converted into passenger and freight demand using historical trend data.
For example, Airbus bases its projections for passenger traffic between
regions on historic logarithmic relationships between GDP in those regions and
passenger traffic within those regions and aggregates them to achieve its world
demand for air travel. The forecast then translates the resultant passenger
demand into demand for seats after adjustment for anticipated changes in load
factor and into aircraft demand after adjustment for changes in aircraft speed,
annual utilization and average size. Manufacturers will then make their
judgments with respect to their ability to obtain market share and make
decisions as to the appropriate production rate.
Unless the manufacturer's forecast has predicted the economic cycle
correctly, changes in GDP from that utilized in the forecast will produce a
change in air travel demand which will impact demand for aircraft. The resultant
shrinkage or growth in backlog will then cause the manufacturer to increase or
reduce the production rate. Due to delays in the information flow and response
times, such changes in production tend to lag behind changes in the economy and
thus are magnified in effect and more disruptive in impact. Estimates of the
likely production rate changes, requires a careful assessment of backlogs and
their rate of increase or shrinkage. As Figure 2 has shown, orders for large jet
aircraft are at an all-time high in absolute terms.
Since 1994, deliveries have fallen below demand, creating an increasing
backlog of orders that caused the manufacturers to increase production. Should
demand subsequently slow, airlines would seek to reduce supply resulting in an
excess of capacity in the form of too many aircraft. This, in turn, could lead
to a decline in aircraft values, as occurred in the early nineties. Although
this possibility exists, its impact should not be as significant as it was
previously. The order backlog as of April 2001 represents only 28 percent of the
world's commercial jet aircraft fleet as compared to 39.6 percent in 1991,
shortly before the last substantial market decline as shown in Table 1.
------------------------
(10) "Visit any Boeing factory today and you enter a place that is strikingly
different from the one that existed two or three years ago. Regardless of its
level of products, a less crowded environment will be found". Source: Boeing
Annual Report 1999.
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TABLE 1
JET AIRCRAFT ORDER BACKLOG
<Table>
<Caption>
YEAR 2001Q1 2000
---- -------- --------
Order Backlog.............................................. 4,643 4,732
Commercial Jet Aircraft Fleet.............................. 16,207 15,991
Backlog as a percent of fleet.............................. 28.0% 29.6%
</Table>
SOURCE: ACAS--APRIL 2001
A key indicator of the robustness of the aircraft market is the number of
aircraft offered on the open market for sale or lease. As shown in Figure 3
below, the number of such aircraft has been increasing, but at a modest rate.
Furthermore, aircraft on offer at the end of 1999 represented 3.8% of the world
fleet, less than half of the percentage offered in 1991. Most of the aircraft on
offer have older technology engines that require modifications in order to meet
current noise regulations. Many of these aircraft are not likely to re-enter the
market and, therefore, do not represent a market overhang. New, more efficient
aircraft remain in short supply, with no significant overhang evident as of
year-end 2000. Unofficial reports, however, suggest that the underlying
availability of new and used aircraft that comply with Stage 3 requirements is
slightly higher than reported.
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<Page>
FIGURE 3
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
YEAR END NUMBER OF AIRCRAFT % OF WORLD FLEET
1988 217 3.1116%
1989 385 5.00%
1990 553 7.00%
1991 762 8.00%
1992 647 7.00%
1993 716 7.00%
1994 575 5.00%
1995 470 4.00%
1996 299 3.00%
1997 344 3.00%
1998 408 3.00%
1999 554 4.00%
2000 546 3.00%
</Table>
In summary, current indicators suggest that the supply of aircraft is
currently in reasonable balance with demand. There can be some optimism that the
cyclical extremes of the past will be less severe in the future. Both airlines
and manufacturers appear to be more effectively managing capacity growth than
they did in the past. Manufacturers are employing better manufacturing process
analysis, using "just-in-time' supply and smart manufacturing techniques to
reduce lead-times, thus enabling them to react more swiftly and make the
appropriate supply adjustments. Airlines are also taking advantage of this
flexibility to enter into agreements with manufacturers that permit adjustment
in models to be delivered.
LIFT cannot assure you, however, that future levels of returns, deferrals
and cancellations will not adversely affect the markets in which LIFT competes.
Moreover, as described below, the underlying demand for air travel is highly
sensitive to economic conditions.
In addition, while demand for aircraft has been strong, most aircraft
ordered during the past two years have not yet been delivered. With the recent
decline in airline demand, capacity already exceeds demand. Airline operators
have already commenced efforts to retire older aircraft, and that is impacting
the overall used aircraft market, driving prices lower. The LIFT portfolio is
subject to these market conditions which would indicate the potential of lower
lease and sales rates as well as increased fleet retirements, many of which may
be permanent due to the higher costs of operating aging aircraft.
THE DEMAND FOR COMMERCIAL JET AIRCRAFT
THE AIRLINES AND THEIR RECENT HISTORY
The demand side of the market for new commercial aircraft is dominated by
the requirements of the passenger airline industry. Both manufacturers predict
that almost all their new aircraft sold in the next 20 years will enter the
fleets of passenger airlines. Boeing estimates 96% of new aircraft will be
passenger models; Airbus is slightly lower at 95%. As a result, in order to
understand and predict aircraft market values, it is critical to understand the
historical behavior of the principal drivers of aircraft orders and where those
drivers are heading.
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<Page>
PROFITABILITY
The heavy debt or lease obligations of new aircraft acquisition requires
that airlines have substantial EBITDAR, and thus airline profitability is a
critical factor in airline orders for aircraft. Airline profitability is,
however, also closely correlated to regional and global economic performance, a
principal driver of demand for air travel as can be seen on the chart identified
below as Figure 4. This shows the relationship between airline profitability and
real world gross domestic product ("GDP")(11) over the period 1983 to 1999 and,
in particular, it highlights the major impact on profits of the 1990-1993
recession. Earlier sharp drops in airline profitability or losses were also
experienced by the world's airlines in the 1972-1975 and 1980-1983 periods. Each
followed combinations of economic recession, supply and demand imbalance,
inflation or shocks such as the oil price rises of 1972, 1980 and 1991 as well
as the Gulf War in the latter period.
FIGURE 4
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
YEAR OPERATING PROFIT/(LOSS) ($ MILLIONS) ANNUAL PERCENTAGE CHANGE IN GDP
1983 2000 2.90%
1984 5100 4.80%
1985 4100 3.30%
1986 4600 3.10%
1987 7200 3.10%
1988 10200 3.90%
1989 7600 3.50%
1990 -1500 2.60%
1991 -500 -0.50%
1992 -1800 2.10%
1993 2300 0.10%
1994 7700 3.10%
1995 13500 2.50%
1996 12300 3.00%
1997 16300 3.40%
1998 15900 3.20%
1999 12500 3.40%
</Table>
SOURCES: AIRLINE MONITOR NOV. 2000, IMF WORLD OUTLOOK 2000
As also demonstrated in the chart, for the five years following the end of
the Gulf War recession, despite the disruption to global growth due to the Asian
economic problems, the commercial airline industry experienced a substantial
period of sustained growth, and with it much improved financial performance.
Worldwide airline operating profits rose to $16.0 billion in 1998,(12) which is
expected to be a highpoint in the forthcoming few years. It is likely that world
airlines will see a similar impact to U.S. airlines where operating income has
declined from $7.5 billion in 1998 to $5.4 billion in 2000. The strong financial
results through the mid and late 1990s resulted in a marked improvement in
balance sheets. Thus, the industry is far better equipped than when facing
previous cyclical downturns.
This period of sustained profitability, the longest in the industry's recent
history, created some optimism that the industry has learned how to moderate its
cyclicality. The factors encouraging such a view, such as broadening alliances
between airlines reducing the likelihood of destructive competition and
pressures from the financial community on management to focus on profitability
rather than market share have been overcome by the combination of reduced
demand, higher fuel prices and rising labor costs. Thus, the industry is not
immune from cyclicality, but, while the decline in profitability of the U.S.
industry in 2001 is extreme, it is still too early to determine whether the
industry can moderate
------------------------
(11) Note that figure 4 shows operating profit and thus net losses in down parts
of the cycle have been much more substantial.
(12) The Airline Monitor November 2000.
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<Page>
or reduce the overall down cycle through self help actions. As previously noted,
however, profitability in the commercial airline industry has historically been
extremely cyclical since the product offered by airlines, whether a passenger
seat or a cargo container, is not easily differentiated, is also perishable and
is thus subject to a high degree of price volatility.
One can therefore at best look to a reduced cyclicality and any confidence
in increased robustness of the industry's financial structures will continue to
be tested in today's economy.
While the industry has been impacted by several factors, fuel price
increases commenced in the second quarter of 1999. For example, for U.S.
airlines fuel cost which averaged some 45 cents per gallon in the first quarter
of 1999 had reached 65 cents by the end of that year and peaked at 92 cents in
the fourth quarter of 2000 or 16% of total costs. Overall, the world's airlines
operating margins showed a significant drop in 1999 from the previous year. The
first quarter of 2001 is proving to be particularly disappointing for most
airlines with many reporting significant losses. Fuel prices are coming down
and, although there is no expectation that they will decline to the levels seen
in 1999, the reductions will have some positive impact on airline profitability,
but not enough to offset the reduced demand or higher labor costs. In addition,
the hedging programs that moderated the impact of oil price increases for many
airlines have effectively expired. Thus, fuel prices remain a drag on
profitability.
More significantly, however, labor costs and the costs of labor disruption
are impacting profits, particularly in the United States, stimulated by a
substantial increase in pay and benefits obtained by United Airlines' pilots, in
2000 and most recently by Delta Air Lines' pilots. With the additional impact of
the apparent slowdown in the U.S economy, several U.S airlines have reported
significant losses in the first two quarters of 2001.
TRAFFIC CAPACITY AND YIELDS
Overall passenger traffic growth is a function of increased economic
activity and rising real incomes. Consequently, global air traffic in the past
few years has been generally strong, recovering from the severe economic
slowdowns, currency devaluation and political instability of the early nineties
that created a less robust environment for growth in passenger demand.
From 1993 through the 2nd quarter of 2000, traffic, as measured by revenue
passenger kilometers, has grown at a rate exceeding seven percent per annum;
capacity, as measured by available seat kilometers, has increased by five
percent per annum; and load factors, a measure of capacity utilization, have
risen 9 percentage points or 14%.(13)
One factor that has contributed to the rise in demand and increase in load
factor has been the growing use of sophisticated computer-based revenue
management techniques that better enable airlines to profitably sell otherwise
empty seats at below full fare levels. These techniques which have resulted in
an airline focus on maximizing revenue have been achieved by trading off yield
versus load factor. This focus on revenue in combination with historic
competitive trends has resulted in an annual 1.9 percent decline in yields over
the last five years.(14)
Cargo traffic also grew by seven percent per year during the past
decade.(15) This growth reflected the general expansion of economic activity;
improved cargo handling and logistics; increases in overnight delivery services
and changes in production methods. In addition, cargo growth was further
stimulated by continued decline in air cargo rates. Air cargo traffic, however,
has seen an even more dramatic decline in both volume and yield during the last
nine months, and both large and small cargo airlines, throughout the world, have
suffered as a result.
------------------------
(13) The Airline Monitor January/February 2001.
(14) It should be noted that airline yield have fallen in real terms for a much
longer period than the previous five years. Declining yields has been a
characteristic of this industry.
(15) IATA World Air Transport Statistics--1998 (p.10).
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<Page>
UNIT COSTS
The airlines have also been successful in controlling unit costs. For
example, in the U.S., operating costs per available seat kilometer have
decreased by 2.4 percent per annum over the past five years. In particular,
distribution costs have fallen substantially due to Internet sales, E-ticketing
and sharply reduced sales commissions.(16)
Looking forward, some cost items are likely to increase significantly. As
mentioned earlier, labor costs, for example, are beginning to rise
substantially. In the United States, the recent pilot contract agreements at
United Airlines and Delta Air Lines call for significant pay increases. This may
lead to pattern-bargaining at all major U.S. airlines resulting in an escalation
of labor costs in the U.S., which may increasingly impact airlines in the rest
of the world as evidenced by pattern style bargaining at Lufthansa and KLM.
Overall fuel costs have also declined throughout the 1990's, as a result of
the use of more fuel efficient aircraft, and a general downward trend in fuel
price. Fuel prices have, however, risen rapidly since mid-1999. Fuel that cost
an average of 45.0 cents per gallon in June 1999, averaged 81 cents per gallon
in March of 2001.(17) Fuel costs, however, have recently declined and, at the
beginning of August 2001, the New York spot market was $0.74 per gallon, a
reduction of 11.1% in the price as compared to a year previously.(18)
The increase in the world prices for oil has not yet been fully reflected in
airline income statements as a significant portion of airline fuel purchases in
the past year have been obtained through hedged contracts that have protected
their users from the full impact of price fluctuations. While fuel prices have
moderated, continued high demand for petroleum products and OPEC's recent
announcement of a cut in production mean that a return to the price levels seen
in the mid 1990s cannot be ruled out. Industry analysts, however, do not expect
that there will be a lasting impact on financial performance unless fuel prices
escalate further and remain inflated for a long period of time. Prices in real
terms are still lower than at earlier peaks and importantly newer aircraft are
much more fuel efficient than previous models.
THE REGULATORY ENVIRONMENT AND PRIVATIZATION
The U.S. deregulated the U.S. airline industry in 1979 and its airlines now
generally operate routes, set schedules and charge fees in accordance with
market forces. Over the last twenty years, the U.S. government has also pushed
for more liberalized Air Service Agreements with other countries. Other
countries have also pursued reforms to the economic regulations governing the
airline industry. Most industry studies have concluded that regulatory reform
has helped the industry become more efficient.
The reduction in economic regulation governing the world's airlines has been
accompanied by the privatization of many of the world's airlines. A number of
state-owned airlines have been privatized either in whole or in part in response
to this trend. The vast majority of the airlines operating in the Americas,
Western Europe, and the Pacific Rim now have little or no government
ownership.(19)
------------------------
(16) Major advances in information technology for scheduling, route analysis,
reservations, ticketing and yield management have also contributed by allowing
airlines to manage their route systems as integrated networks built around
powerful hubs, less vulnerable to competition. Those same technologies have also
enabled meaningful reductions in cost
(17) Air Transport World--July 2001
(18) Aviation Daily, August 8, 2001
(19) ICAO Financial Data 1999.
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ALLIANCES
The development of global alliances is a trend that has been facilitated by
regulatory reforms and privatization. These global alliances increase "on-line"
service offerings by integrating and coordinating the schedules of the alliance
members thereby achieving economies of scope as well as economies of scale. A
further benefit has been the provision of a broader range of services to their
customers.
Alliances provide a means of achieving those economic benefits that in other
industries might be achieved by transborder acquisition or merger but that are
constrained in the airline industry in many countries by laws prohibiting
substantive foreign ownership or control. Global and regional alliances have
taken many forms and involve many different levels of linking two or more
airlines.
Recently, the U.S. government has granted antitrust immunity to alliances
that meet specified conditions, enabling the participating airlines to act as a
single carrier without necessarily merging operations.
Currently, there are five broad global alliances in various stages of
development:
(1) "Star Alliance", which links Lufthansa, United Air Lines, Air
Canada, Thai Airways, VARIG, British Midland, Ansett Australia, Austrian
Airlines, All Nippon Airways, SAS, Air New Zealand, Lauda Air, Singapore
Airlines, Tyrolean Airways and Mexicana.
(2) "oneworld", which links American Airlines, British Airways, Cathay
Pacific, Qantas, Iberia, Finnair, LanChile and Aer Lingus.
(3) "Wings", which links KLM, Northwest Airlines, Kenya Airways, Japan
Air System, Braathens, Malaysian and Continental.
(4) "SkyTeam", which links Delta Air Lines, Air France, Korean Airlines,
Alitalia, CSA Czech Airlines and AeroMexico.
(5) "QUALIFLYer" which links Swissair, Sabena, Turkish Airlines, TAP Air
Portugal, Crossair, LOT, Air Littoral, Air Europe, Volare, Air Liberte,
Portugalia and AOM.
It should be noted, however, that "QUALIFLYER" has recently shown signs of
becoming less of a formal alliance in the near future.
Regional alliances are also emerging such as Grupo Taca, which consolidated,
among other operators, TACA from El Salvador, NICA from Nicaragua, LACSA from
Costa Rica, COPA from Panama and Aviateca from Guatemala.
The authorities in the U.S. and the EU are scrutinizing these alliances very
carefully. This scrutiny could lead to changes to the structure and shape of
future alliances. It is certain, however, that within the next five years, all
these alliances will be firmly established having gone through their
developmental stage and maturing to realize, on a much greater scale, the
economic benefits for which they are being established.
The creation of alliances is expected to result in somewhat greater
stability for the commercial aviation industry and may well enhance the credit
of certain participating airlines. The resulting stability may serve to balance
some of the cyclical effects encountered during past industry recessions. While
the most significant benefits to date have been in market expansion, each of the
alliances is increasingly focusing on cost reduction synergies, which include
purchasing. Aircraft acquisition and leasing may be impacted by this trend, with
fewer but stronger potential customers using their market power to lower prices
and rates. This is already evidenced by the joint Grupo TACA and Lan Chile order
for Airbus aircraft.
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THREATS TO CONTINUED ROBUST AIRLINE GROWTH
The last decade has had several specific contributors to its recent
robustness:
Supply was constrained by three significant factors:
(1) The airlines' financial weakness emerging from the severe
downturn at the beginning of the decade limited new aircraft orders and
deliveries in mid-decade,
(2) The implementation of noise regulations that caused an unusually
high aircraft retirement rate
(3) Aging aircraft regulations that stimulated early retirement of
older aircraft as a result of increased maintenance costs.
Demand has been stimulated, particularly over longer routes, by the rapid
globalization of the world economy and, by the liberalization of air travel
regulation.
There are, however, new areas of concern:
(1) The sharp increase in price of fuel has increased the operating
costs of most airlines.
(2) Recent collective bargaining agreements resulted in significant
labor cost increases, especially in respect of pilots.
(3) Airports and Air Traffic Control congestion problems may increase
costs(20) and constrain airline growth.
(4) The Asia/Pacific region is still recovering from the downturn it
faced three years ago.
(5) The Latin America region, particularly Argentina, Brazil and Chile,
is experiencing a substantial economic slowdown.
(6) Internal Russian traffic has declined sharply due to a general
weakening of the economy together with the ending of heavily subsidized airline
services and shows no sign of recovery.
(7) The recent development of American Airlines' acquisition of TWA
raises questions of further consolidation. Although the United Airlines and
USAirways merger was halted by a U.S. Department of Justice ruling, there still
exists a possibility that further consolidation will occur in the United States
and in Europe.
THE FORECAST FOR THE COMMERCIAL AVIATION INDUSTRY
Aircraft manufacturers, government agencies, airline groups and others
produce detailed long-range forecasts of future growth of commercial aviation.
These manufacturer forecasts include world economic growth, inflationary
trends, traffic demand, aircraft supply and demand, financing availability,
environmental issues, technological developments and structural changes within
both the manufacturing and airline industries. In general, these sources have
projected average annual passenger traffic growth in the region of 5 percent per
annum over the next 10 and 20-year periods.
For example, in their current twenty-year economic and traffic growth
forecasts, released in August 2000, Airbus forecasts a passenger growth rate of
4.9 percent annually to 2019, while Boeing is marginally lower at 4.7 percent
per annum. For cargo, Boeing projects growth of 6.4 percent, while Airbus
forecasts a lower 5.7 percent annual rate.
------------------------
(20) Many airports around the world are now congested. Delays are rising causing
higher operating costs.
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<Page>
PASSENGER DEMAND
According to the Boeing forecast, the most rapid growth rates are projected
for the Africa, Asia/ Pacific and Latin American regions. The smallest growth
rates are expected in North America where the base from which to measure growth
rate is much larger and in the Middle East.
TABLE 2
WORLDWIDE GROWTH IN AIR TRAVEL
<Table>
<Caption>
REVENUE-PASSENGER KILOMETERS
(BILLIONS) ANNUAL GROWTH RATE
----------------------------------------- ------------------------------------
REGION 1990 2000 2010 2020 1990-1999 2000-2010 2000-2020
------ -------- -------- -------- -------- ---------- ---------- ----------
North America.............. 738 1,105 1,528 2,219 5.2% 3.3% 3.5%
Latin America.............. 143 242 428 729 0.06797212 0.05867545 0.05668516
Asia & Pacific............. 278 437 868 1,647 5.8% 7.1% 6.9%
Middle East................ 54 97 145 224 7.6% 4.1% 4.3%
Africa..................... 75 133 214 334 7.4% 4.9% 4.7%
Europe..................... 647 1,164 1,803 2,788 7.6% 4.5% 4.5%
CIS........................ 248 80 137 226 (13.2)% 5.5% 5.3%
</Table>
SOURCE: BOEING CURRENT MARKET OUTLOOK, 2001.
COMPONENTS OF THE DEMAND FOR JET AIRCRAFT
THE RELATIONSHIPS BETWEEN TRAFFIC & THE DEMAND FOR AIRCRAFT Growth in air
traffic demand is closely correlated with, but does not translate directly into,
demand for new aircraft as several other factors must be considered. These
factors include:
FOR PASSENGER AIRCRAFT
(1) Changes in the average number of seats per aircraft.
(2) Changes in the rate of aircraft retirements.
(3) Changes in daily utilization of aircraft (i.e. hours flown).
(4) Changes in capacity utilization (i.e. occupancy ratio or load
factor).
FOR CARGO AIRCRAFT
(2) and (3), above, and
(5) Changes in the share of freight traffic carried in the bellies
of passenger aircraft or combi(21) aircraft.
(6) Number of passenger aircraft converted to freighters.
While Airbus and Boeing are in close agreement on the likely increase in traffic
demand for both passengers and cargo, the principal driver of demand for
aircraft, they differ significantly in their assessment in several of the above
factors, notably aircraft size. Thus Boeing predicts the size of current
worldwide commercial jet fleet of approximately 13,670 aircraft will grow
132 percent, over the next two decades, while Airbus forecasts it will increase
by about 91 percent in number of aircraft(22).
------------------------
(21) Aircraft designed to carry passengers and freight in separate main deck
compartments.
(22) It should be noted that Boeing and Airbus forecasts start from different
bases:
- Boeing includes all jet aircraft with greater than 50 seats
- Airbus includes only aircraft with 70 or more seats.
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<Page>
Whichever of the different assumptions made by the two large aircraft
manufacturers should prove correct, it will have significant impact on future
aircraft values of different categories of aircraft.
PASSENGER AIRCRAFT SIZE The principal variance in the forecasts of future
aircraft production between the two manufacturers lies in their different
perceptions of the future structure of air travel. Table 4 below shows the clear
diversity of views with respect to average aircraft size. Boeing forecast in
1999(23) that the average size of aircraft operated would increase only
0.6 percent annually over the next twenty years, while Airbus expected an
increase of 1 percent annually over the same period. As a point of reference,
the Airline Monitor, a respected industry journal, which routinely issues
forecasts and other analyses, forecast a 0.86 percent annual growth in seats per
aircraft.
TABLE 3
AVERAGE AIRCRAFT SEAT CAPACITY
<Table>
<Caption>
SOURCE BOEING AIRBUS AIRLINE MONITOR
------ --------- --------- ---------------
Forecast Period......................... 1999-2019 2000-2019 2000-2019
Beginning of Forecast Period............ 199 175 176
End of Forecast Period.................. 213 218 190
</Table>
By way of comparison, the average seating capacity of U.S. major airlines
actually declined from 163.4 seats in 1990 to 152.9 seats in 2000 a drop of
6.6%. Worldwide, seating however increased marginally from 172.7 seats per
aircraft to 175.4 during the same time period.(24) The following chart
summarizes the changes in average seating capacity that have occurred in the
U.S. market:
TABLE 4
CHANGES IN AVERAGE AIRCRAFT SEATING CAPACITY
US MAJOR AIRLINES--1Q 1991 VS 1Q2001
<Table>
<Caption>
SEATING CAPACITY
-------------------
AIRCRAFT TYPE 1Q 1991 1Q 2001 % CHANGE
------------- -------- -------- --------
737-100/-200...................................... 109 115 5.5 %
737-300/-700...................................... 131.4 127.1 (3.3)%
737-400........................................... 146 141 (3.4)%
747-200/-300...................................... 366.3 352 3.9)%
747-400........................................... 402 390 (3.0)%
757-200........................................... 194.5 186.4 (4.2)%
767-300........................................... 228 211.5 (7.2)%
DC-10............................................. 278.3 275.8 (0.9)%
DC-9.............................................. 107.7 106.2 (1.4)%
MD-11............................................. 314 245.5 (21.8)%
A300-600.......................................... 267 231 (13.5)%
A320-100/-200..................................... 148.5 144.7 (2.6)%
MD-80 Series...................................... 141.7 139 (1.9)%
</Table>
SOURCE: COMPILATION OF DOT FORM 41 DATA FROM 1Q 1991 AND 1Q 2001. SEATING
CAPACITY ON FORM 41 IS CALCULATED USING AVG SEAT MILES (ASM)/REVENUE PASSENGER
MILE (RPM)
------------------------
(23) Boeing's 2000 forecast projects that future average size will be "flat or
falling"
(24) Airline Monitor "US Jet Aircraft Fleet--Status as of Dec 31, 2000" & "World
Jet Aircraft Fleet- Status as of Dec 31, 2000" July 2001
74
<Page>
It is interesting to note from the table above that those aircraft that have
seen the largest percentage reduction in average seat size have been the larger,
wide-body aircraft. The particularly large decline in the MD-11 passenger
averages is due to the reconfiguration in 1999 from a 3-class international
configuration to a 2-class layout with significantly increased business class
seat quantities. This reconfiguration reduced average seat miles in the entire
aircraft by the removal of high density tourist class seating.
The difference between the Boeing and Airbus forecasts of seat size, lies in
their different assessment of future travel patterns. Boeing is anticipating
that traffic on major routes will continue to fragment as smaller, more
efficient aircraft enable airlines to take passengers directly to their
destinations at costs comparable to those of larger aircraft. Airbus on the
other hand, is projecting that demand will continue to grow over the major
routings but that congestion will force the use of larger aircraft. In addition,
Airbus expects that the potential economics of a new technologically advanced
aircraft, will accelerate this trend and produce more demand for its A380, 550
seat aircraft. The Airbus forecast, therefore, calls for larger, but fewer,
aircraft units produced to satisfy requirements created by expected traffic
growth.
The manufacturers, therefore, reach sharply different conclusions with
respect to the number of aircraft that will be produced over the next 20 years
and the composition of the world's fleet at the end of that period, with Boeing
forecasting a requirement of only 330 aircraft of more than 500 seats while
Airbus projects some 1,235 within this size category.
AIRCRAFT UTILIZATION Airlines are also attempting to increase aircraft
productivity by a variety of means including shorter ground turn around times
and more efficient aircraft scheduling. While congestion and the marginally
slower cruise speeds of aircraft designed to reduce fuel consumption have
lowered the average number of passenger miles per block hour, this has been
offset by an increase in the average sector length of flights, which has the
effect of increasing average block speed(25). Airbus forecasts that annual
utilization of large jet aircraft will increase from 3,502 hours in 1999, to
3,636 in 2009 and to 3,736 in 2019, based on a combination of increase in hourly
utilization and an increase in segment length.(26)
PASSENGER AIRCRAFT CAPACITY UTILIZATION Capacity utilization or, load
factor, has risen substantially on a worldwide basis, increasing, as shown in
Table 5 below, from 64 percent to 69 percent between 1991 and 1999. The
manufacturers expect that future load factor levels will increase further, in
part due to the effective use of revenue management to sell marginal seats.
Airbus forecasts that, over the next 20 years, some 5 percent of the
increase in passenger demand will be accommodated by increases in average load
factors.
------------------------
(25) "Block Speed" is the average speed achieved from the time the aircraft
leaves the gate until it reaches the gate at destination.
(26) Increased segment length not only increases the average hourly utilization,
but also results in faster block speeds.
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TABLE 5
PASSENGER LOAD FACTORS BY WORLD REGION
<Table>
<Caption>
ASIA/ NORTH LATIN WORLD
YEAR EUROPE AFRICA MIDDLE EAST PACIFIC AMERICA AMERICA AVERAGE
---- -------- -------- ----------- -------- -------- -------- --------
1991................................ 65% 59% 68% 69% 63% 60% 64%
1992................................ 66% 61% 65% 67% 64% 58% 64%
1993................................ 66% 61% 66% 68% 64% 58% 64%
1994................................ 68% 60% 64% 69% 66% 61% 65%
1995................................ 70% 62% 67% 69% 67% 65% 67%
1996................................ 70% 62% 67% 71% 69% 66% 68%
1997................................ 72% 62% 68% 69% 71% 67% 69%
1998................................ 70% 62% 67% 66% 71% 62% 69%
1999................................ 70% 59% 68% 69% 71% 61% 69%
</Table>
SOURCE: ICAO CIVIL AVIATION STATISTIC
In summary, Airbus(27) forecasts a 4.9% annual increase in worldwide
passenger traffic over the next 20 years, while Boeing forecasts a marginally
lower annual growth of 4.8%. The manufacturers project that these growth rates
will be met by:
SUMMARY
<Table>
<Caption>
AIRBUS BOEING
-------- --------
Annual Increase in Passenger Aircraft....................... 3.2% 4.4%
Average Increase in Seating................................. 1.0% *
Average Increase in Aircraft Utilization.................... 0.5% *
Average Increase in Load Factor............................. 0.3% *
Total Increase in Annual Traffic............................ 4.9% 4.8%
</Table>
CARGO AIRCRAFT CHARACTERISTICS The use of dedicated freighter aircraft
falls into two principal categories:
(1) Long haul service carrying high value or time-sensitive products in
high volume markets, notably transpacific, transatlantic and Asia--Europe.
Aircraft used for such services are typically longhaul and their scheduled
point-to-point operation permits high utilization of the aircraft.
(2) Package freighter service carrying a wide variety of express
materials offering overnight or two-day delivery over short, medium and long
distances as typified by the principal products of FedEx, DHL, UPS and Emery
Airlines. Typically, these services employ connecting flights in a hub-and spoke
operation, that uses a large number of aircraft with low utilization feeding
long haul aircraft with high utilization.
The different utilization of these two categories results in two different
types of demand for freighter aircraft. The former permits fixed capital costs
to be distributed over high annual hours and thereby makes the operation of new
large, high capital cost freighters with low unit operating costs economically
feasible. In contrast, the economics of the latter more typically requires low
utilization feeder aircraft with low fixed costs at the expense of higher
operating costs, which provides a role for older passenger conversions.
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It should also be noted that lower volume industrial or agricultural product
markets, such as Latin America and Africa, cannot easily achieve high flight
utilization or high yielding freight and are thus also better suited for older,
converted aircraft.
CARGO AIRCRAFT FORECAST SUMMARY Both Airbus and Boeing have forecast
worldwide freighter requirements over the next twenty years. Table 6, below,
shows that the two manufacturers project freighter fleets more than doubling by
2019. The majority of additional freighters will be converted passenger
aircraft, but new freighter deliveries are forecast to be in the 700-800 unit
range.
TABLE 6
MANUFACTURERS' FORECASTS OF DEMAND FOR FREIGHTERS
<Table>
<Caption>
BOEING AIRBUS
-------- --------
Annual Growth in Freight Ton-Miles.......................... 6.4% 5.7%
Share of freight market carried by freighters
Year 1999........................................... 40% 45%
Year 2019........................................... 44% 48%
Current Freighter Fleet..................................... 1,676 1,510
Total Freighter Requirement 2019............................ 3,197 3,449
----- -----
Net Additions required...................................... 1,521 1,839
Plus Retirements............................................ 1,088 1,153
Less Passenger Conversions.................................. 1,806 1,389
----- -----
Net New Freighter Requirements.............................. 803 703
</Table>
SOURCE: BOEING MARKET OUTLOOK 2000, AIRBUS GLOBAL MARKET FORECAST 2000
SH&E has recently projected that approximately 60 percent of the demand for
freighter aircraft in the 1997-2008 period will be satisfied by converting
passenger aircraft to freighter, while Boeing and Airbus project that over the
longer twenty year period conversions will account for 70% and 75% of demand
respectively.
SH&E FREIGHTER AIRCRAFT DEMAND FORECAST (1997 TO 2008)
<Table>
<Caption>
UNITS REQUIRED OEM PAX CONVERSIONS
-------------- -------- ---------------
Low Forecast.............................. 364 146 218
High Forecast............................. 407 163 244
</Table>
SOURCE SH&E
AIRCRAFT RETIREMENT The rate of aircraft retirements is an important
factor in the demand for new aircraft. There are a number of factors that
influence a life of an aircraft and hence the aircraft retirement age.
Manufacturers use the concept of a "design life" for new aircraft. This concept
attempts to determine what the reasonable economic life of the aircraft will be
and then designs the aircraft so that each component will either meet or exceed
that life after allowing for regular maintenance to restore life.
The initial determined design life, however, makes critical assumptions with
respect to major economic, environmental and technological drivers that will
impact airlines' use of the aircraft. For example, fuel prices during the 80's
and 90's did not increase at the rates forecast during the seventies
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when several new aircraft were conceived. As a result, while the manufacturers
had assumed that their new fuel-efficient aircraft would quickly replace
previous models, the lower than predicted fuel prices enabled airlines to
operate older aircraft such as the DC9, 737 and 727 economically well beyond
their original design lives. While more stringent environmental regulations,
particularly noise and emissions limitations, encouraged retirement of such
aircraft, the low fuel costs persuaded many operators to meet noise limitations
by investing in noise suppression modifications known as "hush-kits" as a more
economical choice than investing in new aircraft.
Table 7 below shows the age of the current world passenger fleet and
indicates that while both wide and narrowbody fleets are removed from passenger
service at less than thirty years, there has been a retention of the older
narrowbody aircraft with over 15% remaining in service over thirty years.
TABLE 7
COMMERCIAL AIRCRAFT AGE DISTRIBUTION BY SEAT SIZE
<Table>
<Caption>
AGE (YRS) WIDE-BODY NARROWBODY
--------- ----------- -----------
< 5........................... 1,085 26.50% 2,478 24.09%
> 5-10........................ 919 22.44% 1,804 17.54%
> 10-15....................... 651 15.90% 1,828 17.77%
> 15-20....................... 557 13.60% 962 9.35%
> 20-25....................... 471 11.50% 1,004 9.76%
> 25-30....................... 355 8.67% 634 6.16%
> 30-35....................... 57 1.39% 1,356 13.18%
> 35.......................... 0 0.00% 219 2.13%
Totals........................ 4,095 100% 10,285 100%
Average Age................... 12.01 years 14.66 years
</Table>
SOURCE: ACAS APRIL 2001
The substantial increase in fuel prices, accompanied by more stringent
regulations governing the maintenance of older aircraft as well as the threat of
more limiting noise and emissions regulations are, however, making investment in
new technology with its lower fuel consumption and reduced maintenance costs
more attractive.
Retirements of older aircraft from passenger service are thus likely to
accelerate. Among smaller aircraft, the technology of small regional jets has
precipitated the early retirement of comparably sized turboprop aircraft and is
leading to the development of larger 70-90 seat aircraft designed for short
regional markets.
As Table 7 shows, passenger jet aircraft have historically been withdrawn
from passenger service before reaching 35 years of age. The first wide-body
aircraft are now reaching 30 years old and it remains to be seen how much
further their useful passenger lives can extend. Retirement from passenger
service, however, does not necessarily signify the end of the termination of an
aircraft's earning capacity. Changes in the operating role of an aircraft,
notably undertaking conversions from passenger to freighter configuration,
contribute appreciably to the extension of aircraft lives. Airbus forecasts that
41 percent of aircraft removed from passenger service will continue to operate
as a result of conversion to freighters. Similarly, Boeing projects that
36 percent of aircraft retired from passenger service will be converted to
freighters.
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<Page>
It should also be noted that manufacturers have improved construction
methods, particularly those that prevent corrosion and extend fatigue lives, and
that suggests that structurally newer aircraft such as those in the LIFT
portfolio may have longer lives than earlier models.
FIGURE 5
HISTORICALLY OVER 60% OF NARROWBODY AIRCRAFT REMAIN IN SERVICE OVER 25 YEARS.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
AGE WIDE BODY ALL JETLINERS SINGLE AISLE
1 100% 100% 100%
2 98% 98% 97%
3 93% 97% 98%
4 97% 96% 96%
5 91% 97% 97%
6 94% 97% 97%
7 91% 96% 99%
8 89% 96% 97%
9 91% 95% 96%
10 93% 94% 95%
11 90% 91% 92%
12 87% 87% 87%
13 80% 86% 86%
14 89% 90% 91%
15 62% 89% 88%
16 72% 73% 80%
17 52% 67% 78%
18 57% 72% 82%
19 53% 64% 80%
20 48% 63% 71%
21 50% 61% 70%
22 47% 60% 62%
23 37% 47% 48%
24 39% 61% 72%
25 23% 44% 63%
26 30% 40% 50%
27 29% 34% 39%
28 30% 35% 40%
29 15% 24% 38%
30 3% 22% 33%
31 6% 32% 34%
32 24% 23%
33 21% 20%
34 11% 10%
35 7% 7%
</Table>
SOURCE: AIRBUS GLOBAL MARKET FORECAST 2000-2019, JULY 2000.
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<Page>
TWENTY YEAR FLEET GROWTH SUMMARY
A compilation of industry forecasts is as follows:
TABLE 8
PROJECTED TWENTY YEAR COMMERCIAL AIRCRAFT FLEET GROWTH
<Table>
<Caption>
BOEING AIRBUS(29) AIRLINE MONITOR
-------- ---------- ---------------
CURRENT FLEET (33)
Passenger................................... 11,994 10,349 11,465
Freighter................................... 1,676 1,510 1,504
------ ------ ------
Total..................................... 13,670 11,859 12,969
PASSENGER
Current Fleet............................... 11,994 10,349 11,465
New A/C Added............................... 21,512 14,661 12,201
Freighter Conversions....................... (1,806) (2,389) N/A
Retirements................................. (3,142) (3,448) N/A
------ ------ ------
2018 Fleet Total.......................... 28,558 19,173 23,666
FREIGHTER
Current Fleet............................... 1,676 1,510 1,504
New A/C added............................... 803 703 1,503
Freighter Conversions....................... 1,806 2,389 N/A
Retirements................................. (1,088) (1,153) N/A
2018 Fleet Total.......................... 3,197 3,449 3,007
Total Projected 2018 Fleet................ 31,755 22,622 26,673
FORECAST SUMMARY
Additions for Growth........................ 18.085 10,763 14,530
Additions for Replacement................... 4,230 4,601 5,237
------ ------ ------
Total Aircraft Additions.................. 22,315 15,364 19,000
Aircraft Additions Per Year................. 1,116 768 950
</Table>
CONSIDERATIONS
AIRCRAFT PURCHASE PRICE AND LEASE RATE TRENDS
Aircraft manufacturers have historically priced their products by
discounting from list prices that are adjusted annually with some link to
inflation. The size of this discount varies widely depending upon a number of
factors including order size, market conditions, competition and other elements.
Discounting is also encouraged by the duopolistic nature of the market and the
on-going profit generated by manufacturers from the sale of parts and support
throughout the life of an aircraft.
Thus, while list prices have typically been raised at rates equal to or
exceeding inflation, both manufacturers already have sold a large portion of
their production in the next few years at price levels that have already been
agreed upon, subject only to escalation clauses based on inflation factors.
Consequently, it takes several years before the full impact of price increases
can be realized by the manufacturers.
Used aircraft prices, and corresponding lease rates, historically have
directionally followed new aircraft prices.
LEASE RATES Both lease rates and lease rate factors which equal the lease
rate as a percentage of aircraft price also depend upon a number of factors
including the types of lease, interest rates, tax
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<Page>
rates, the lease term, the forecast residual value of the aircraft at lease
term, credit quality of the lessee and the price of the aircraft. Lease rate
factors tend to fall as lease terms lengthen. Lease rate factors for older
aircraft generally exceed those of new aircraft, due to the need for owners to
recover the capital cost invested over the shorter remaining economic life and
the greater volatility associated with older aircraft residual values.
AIRCRAFT OWNERSHIP PATTERNS Prior to the 1980's, airlines tended to own and
maintain their own aircraft. The technical skills required to maintain aircraft
and thus retain their value were sufficiently high to discourage financial
institutions and others to take ownership risk. Thus, when leases were utilized,
they generally took the form of financial leases with full payout over the lease
term.
Although there has always been some demand for short-term operating leases,
this type of lease became more prevalent in the 1980's. New lessors emerged to
participate in this market segment, initially by acquiring used aircraft, but
eventually by placing speculative orders for new aircraft and finding customers
before delivery of the ordered aircraft. Over the past 20 years, the world's
airlines have used operating leases to acquire a material proportion of the
aircraft that they operate.
As shown in Figure 6 below, the percentage of operating leased aircraft in
the global commercial fleet has gradually risen over the last 10 years.
FIGURE 6
AIRCRAFT LEASE TRENDS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
OPERATING LEASES FINANCIAL LEASES
1991 18.1 24.6
1992 18.1 24.6
1993 18.8 25.4
1994 19.5 25.2
1995 19.7 26.3
1996 20.1 26
1997 20.5 25.6
1998 21 25.7
1999 21 26.2
2000 21.2 26.3
</Table>
When measured as a percentage of the global operating fleet, the increase in
leasing has been modest, in absolute terms, the number of aircraft on operating
leases has risen from 1,614 in 1991 to 2,992 in 2000, an increase of over 80%.
THE AIRCRAFT OPERATING LEASE INDUSTRY The health of world economy and of
the airline industry over the past several years has supported the demand for
aircraft. An additional factor has been the emergence of the aircraft operating
lease industry. Operating leases enable airlines to acquire aircraft without
long-term commitments to a particular model, and thereby create flexibility in
fleet planning. Operating leases also enable airlines without strong balance
sheets or with weak credit to acquire aircraft, often used aircraft, that would
be more difficult to obtain using conventional financing. The emergence of
aircraft operating leasing was led by two major organizations, International
Lease
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Finance Corporation, now part of the American International Group, and GPA,
whose principal operations were acquired by GE Capital Aviation Services.
In subsequent years, many smaller organizations, including (a) public and
private financial institutions, (b) financing arms of manufacturers (c) and
public and private partnerships have entered the leasing business. International
Lease Finance Corporation and GE Capital Aviation Services continue to dominate
the market with Debis, which recently acquired AerFi, in third place with over
$5 billion in assets and 224 aircraft under management. Rounding out the larger
leasing firms are CIT Group, which was recently acquired by Tyco International,
GATX, and Bouillion.
These lessors supply a mix of new and used aircraft operating leases,
finance or capital leases of new aircraft and sale-leaseback transactions
generally involving used aircraft. Additionally, several lessors have broadened
their asset bases by securitizing parts of their portfolios while retaining
management, thereby funding further growth. Several aircraft lessors have raised
funds in the capital markets for expansion.
Meanwhile, new leasing companies have been formed including lessors created
as part of the securitization of a portfolio of operating leases that were in
another lessor's portfolio. More banks and financial institutions have been
attracted to the aircraft financing sector and are competing aggressively for
available transactions. The operating lease market is therefore likely to remain
highly competitive.
ENVIRONMENTAL ISSUES Environmental regulations governing international
commercial aircraft operation are generally governed by the International Civil
Aviation Organization, or ICAO, in cooperation with individual sovereign states.
For example, with respect to noise, ICAO established Annex 13, Chapter Three
standards that limit operation of noisy aircraft beyond the year 2000. The
United States enacted very similar legislation, known as FAR 36, Stage 3.
With respect to emissions, the ICAO Committee on Aviation Environmental
Protection has decided to decrease Nitrous Oxide levels by 16 percent and
required implementation in the year 2000 for new engine designs and in 2008 for
newly manufactured engines.
The European Union has been seeking more stringent noise and emission
standards than are currently required by ICAO or by the U.S. and has indicated
that it is considering unilateral regulatory action to address its environmental
goals. As a result, the EU has introduced legislation that will restrict the use
of aircraft that meet the ICAO noise limits only through the use of hush-kits.
The current EU rules prohibit EU nations from adding hush-kitted Stage 2
aircraft to their register even though they are Stage 3 compliant and it further
prohibits non-EU nations from operating hush-kitted Stage 2 aircraft into the EU
unless the individual aircraft operated into the EU prior to the ban
In what seems to be an attempt by the EU to coerce the U.S. to cooperate in
the development of universal noise limits, known for the moment as "Stage 4",
the EU has proposed further legislation. If enacted, that legislation will ban
all hush-kitted Stage 2 operations within the EU after April 2002. As recently
as mid-January 2001, ICAO's Committee on Aviation Environment Protection agreed
on a phased 10dB reduction in noise limits effective January 2006. The U.S. was
a full participant in these negotiations and is a party to the agreement. No
agreement was reached, however, on implementation and thus, no statement has yet
been made regarding the EU's proposed outright ban on hush-kitted aircraft.
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<Page>
MANAGEMENT OF LIFT
CONTROLLING TRUSTEES
The trust agreement governing LIFT provides for four trustees. One of the
four trustees of LIFT is Wilmington Trust Company, which acts as the statutory
trustee and the owner trustee. The remaining three trustees, Joseph E. Francht,
Jr., Jonathan M. Schofield and David H. Treitel are the "controlling trustees"
and have the authority to manage the property and affairs of LIFT under the
trust agreement. All of the controlling trustees are independent from General
Electric Capital Corporation and its affiliates. One of the controlling
trustees, called the equity trustee, will be appointed by the holders of LIFT's
beneficial interest, while the two other controlling trustees, called the
independent controlling trustees, will be independent of those holders. The
holders of the beneficial interest of LIFT may remove and replace the equity
trustee and each independent controlling trustee may be replaced by the other
independent controlling trustee.
The trust agreement requires that any decision relating to insolvency
proceedings, merger or other reorganization of LIFT must be approved by a
unanimous vote of the controlling trustees. Any sale of any aircraft, decisions
requiring LIFT's approval under the servicing agreement for the aircraft or the
agreement with the administrative agent and the reduction of any required level
of reserves must be approved by the equity trustee and at least one of the
independent controlling trustees. The controlling trustees approving aircraft
sales on other than pre-approved terms must also confirm to the indenture
trustee, prior to the sale, that the sale will not materially and adversely
affect the holders of the notes. The acquisition of additional aircraft by LIFT
and the terms of any related financing need only be approved by the equity
trustee.
The controlling trustees, their respective ages and principal activities are
as follows:
<Table>
<Caption>
NAME AGE TITLE/PRINCIPAL ACTIVITIES
---- -------- -------------------------------
Joseph E. Francht, Jr........................... 51 Independent Controlling Trustee
Jonathan M. Schofield........................... 60 Independent Controlling Trustee
David H. Treitel................................ 47 Equity Trustee
</Table>
JOSEPH E. FRANCHT, JR.--Since 1998, Mr. Francht has been a private investor
and consultant. He was Senior Vice President and Treasurer at Northwest Airlines
from 1990-1998, where he was responsible for, among other things, all capital
markets transactions, aircraft financing activities and fleet planning and
analysis. He has also served as chairman of Northwest's Pension Investment
Committee and was on the Board of Directors of Champion Air, Inc. and Northwest
Aerospace Training Corporation. Prior to that, from 1972-1990, Mr. Francht was
employed as a corporate lending officer at Chase Manhattan Bank, now JP Morgan
Chase, and later, at Banque Paribas, now BNP Paribas, in several senior lending
positions, including Senior Vice President-Leveraged Capital Group.
JONATHAN M. SCHOFIELD--Mr. Schofield served as the Chairman and Chief
Executive Officer of Airbus Industrie of North America, Inc., a subsidiary of
Airbus Industrie, a manufacturer of large civil aircraft, from December 1992 to
February 2000. He served as Chairman from February 2000 until his retirement on
March 31, 2001. Prior to his career at Airbus, Mr. Schofield served as President
of United Technologies International, a wholly-owned subsidiary of United
Technologies Corporation, a diversified manufacturer of industrial products,
from 1989 to 1992. Mr. Schofield serves on the Board of Directors of
Aviall Inc., Dallas, TX; Altair Avionics, Norwood, MA; BE Aerospace, Wellington,
FL; FlightTime Corporation, Waltham, MA; and SS&C Technologies, Windsor, CT.
DAVID H. TREITEL--Mr. Treitel is the Chairman and Chief Executive Officer of
Simat, Helliesen & Eichner, Inc., a leading aviation consulting firm based in
New York City. Mr Treitel has been with
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<Page>
SH&E since 1977, and prior to taking up his current position at SH&E in 1996, he
served as the firm's President from 1993 to September 1998 and its Executive
Vice President from 1989 until 1993. Mr. Treitel also serves as a director of
Midwest Express Holdings, Inc and a controlling trustee of Aircraft Finance
Trust, another aircraft securitization vehicle.
As is common with many other special purpose companies, neither LIFT nor any
of its subsidiaries will have any officers or other employees, except, in the
case of a subsidiary, as may be required by applicable law. LIFT has arranged
for GE Capital Aviation Services, Limited, Phoenix American Financial
Services, Inc., Wilmington Trust Company, Bankers Trust Company and Credit
Suisse First Boston to provide aircraft servicing, managerial services and
financial advice.
All trustees will be compensated for travel and other expenses incurred by
them in the performance of their duties. LIFT will pay each of the controlling
trustees $60,000 per year for their services in such capacity as well as
additional compensation in the event LIFT acquires additional aircraft. The
aggregate annual compensation for each controlling trustee may not exceed
$100,000. Additional compensation may be paid to the controlling trustees from
time to time for any services rendered by them on behalf of the subsidiaries of
LIFT. The trust agreement states that the trustees are not liable for money or
other damages to LIFT for a breach of fiduciary or other duties.
CORPORATE MANAGEMENT
Corporate management services for LIFT are provided by the administrative
agent, the financial advisor, the owner trustee and the capital markets advisor.
ADMINISTRATIVE AGENT
Phoenix American Financial Services, Inc. acts as the initial administrative
agent of LIFT. The administrative agent has agreed to provide administrative,
accounting and other services that include:
(1) monitoring the performance of the servicer and reporting its
conclusions to the controlling trustees of LIFT;
(2) acting as a liaison with various rating agencies to assess the
impact of management decisions on the ratings of the notes and coordinating
responses to rating agency questions;
(3) maintaining accounting ledgers and providing draft accounts on a
quarterly and annual basis;
(4) preparing annual budgets for LIFT's approval;
(5) authorizing the payment of expenses and determining the amount of
expense accruals;
(6) coordinating any amendments to the agreements of LIFT and its
subsidiaries, with the approval of LIFT and its subsidiaries;
(7) supervising outside counsel and other professional advisers and
coordinating legal and other professional advice other than with respect to any
service or matter that is the responsibility of the servicer;
(8) preparing and coordinating press releases and reports to investors
and to the SEC, and managing investor relations;
(9) preparing or arranging for the preparation of and filing all
required tax returns; and
(10) overseeing the general operation of any liquidity facility and
advising LIFT as to the appropriate reserve levels for the notes.
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<Page>
In addition to its services on behalf of LIFT, the administrative agent has
agreed to act as the agent for the trustee and the security trustee in managing
the accounts in which the funds and investments of LIFT will be held in the name
of the security trustee and related matters. LIFT is not entitled to direct the
administrative agent as to these matters. Phoenix American Financial
Services, Inc.'s duties for the trustee and the security trustee include:
(1) establishing and maintaining the accounts held in the name of the
security trustee and any other accounts;
(2) directing withdrawals and transfers from those accounts under the
indenture governing the notes;
(3) calculating certain monthly payments and making all other
calculations required under that indenture;
(4) providing reports and other information required under that
indenture;
(5) providing the trustee with information required by the trustee to
provide its reports to the holders of the notes; and
(6) subject to specified limitations and at the written direction of the
controlling trustees, directing the investment of the funds in those accounts in
investments permitted by that indenture.
The administrative agent is entitled to a fee of $624,000 per year for the
first five years of the term and $660,000 per year for the remainder of the
term, plus an additional amount for any additional aircraft acquired in the
future, payable monthly in arrears in equal installments. The administrative
agent is entitled to be indemnified by LIFT against any loss or liability
incurred by the administrative agent in connection with its services to LIFT or
as the agent for the trustee and the security trustee, other than through its
own deceit, fraud, gross negligence or willful misconduct or that of its
officers, directors, agents and employees.
OWNER TRUSTEE
Wilmington Trust acts as the initial owner trustee. The owner trustee will
maintain the books and records, including minute books and records and trust
certificate records, of LIFT. It will make available telephone, facsimile and
post office box facilities and will maintain LIFT's principal place of business
in Delaware.
CAPITAL MARKETS ADVISOR AND FINANCIAL ADVISOR
Credit Suisse First Boston acts as the initial capital markets advisor. The
capital markets advisor is responsible for providing LIFT with investment
banking advice in connection with the issuance of additional notes, financial
advice to assist LIFT in evaluating interest rate risk and other analytical
advice. LIFT may remove the capital markets advisor at any time with 90 days'
written notice. Credit Suisse First Boston also acts as the initial financial
advisor. The financial advisor is responsible for assisting LIFT in developing
models for the purposes of analyzing the financial impact of aircraft lease,
sale and capital investment decisions. The agreement with the financial advisor
may be terminated by either LIFT or the financial advisor on 30 days' written
notice.
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<Page>
CAPITALIZATION
The following table sets forth the capitalization of LIFT as of June 30,
2001, which reflects the issuance of the initial notes and the issuance of the
initial beneficial interests in LIFT. This table should be read in conjunction
with the consolidated financial statements and the related notes appearing
elsewhere in this prospectus.
<Table>
<Caption>
(DOLLARS IN THOUSANDS)
----------------------
Notes payable, net of unamortized discount............... $1,412,922
Beneficial interest holders' equity...................... 13,784
----------
Total capitalization..................................... $1,426,706
==========
</Table>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data in the following table have been
derived from, and should be read in conjunction with, LIFT's consolidated
financial statements as of and for the period ended June 30, 2001 and the
related notes appearing elsewhere in this prospectus.
<Table>
<Caption>
(DOLLARS IN THOUSANDS)
----------------------
BALANCE SHEET DATA:
Aircraft, net.......................................... $ 953,744
Deposit for aircraft purchases......................... 356,925
Notes payable, net of unamortized discount............. 1,412,922
Total assets........................................... 1,445,379
Total liabilities...................................... 1,431,595
Total beneficial interest holders' equity.............. 13,784
STATEMENT OF INCOME DATA:
Rental income from operating leases.................... 1,517
Interest expense....................................... 1,310
Depreciation and amortization expense.................. 507
Net income............................................. (187)
</Table>
86
<Page>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
LIFT was organized on June 13, 2001, and its subsidiaries that own or will
own the initial aircraft were organized prior to June 26, 2001. Neither LIFT nor
any of its subsidiaries may engage in any business activity, other than in
connection with transactions described in this prospectus. The business of LIFT
and its subsidiaries consists principally of:
(1) acquiring and owning the initial aircraft,
(2) aircraft leasing and re-leasing activities,
(3) acquiring and owning any additional aircraft,
(4) selling aircraft, and
(5) maintaining and modifying aircraft.
Cash flows generated from these activities will be used to service interest
and principal on the initial and any future notes and to make distributions of
remaining amounts to the holders of the beneficial interests in LIFT, in each
case, only after various expenses of LIFT and its subsidiaries have been paid.
These expenses include any taxes, maintenance and other obligations to lessees
and fees and expenses of the servicer, administrative agent, financial advisor,
capital markets advisor, reference agent, trustee, security trustee, the paying
agent and registrar of the notes and other service providers. On June 30, 2001,
LIFT had no indebtedness other than the initial notes, but LIFT and its
subsidiaries do have ordinary course of business obligations to service
providers and obligations to lessees with respect to security deposits and
maintenance reserves.
LIFT's ability to generate sufficient cash from its initial aircraft assets
to service the notes will depend primarily on:
(1) the rental rates it and its subsidiaries can achieve on leases,
(2) the lessees' ability to perform according to the terms of those
leases, and
(3) the prices it and its subsidiaries can achieve on any sales of
aircraft.
LIFT's ability to pay principal, interest and premium, if any, on the notes
will also depend on the level of its and its subsidiaries' maintenance
obligations, other operating expenses and any unforeseen contingent liabilities.
Maintenance obligations are expected to increase as the initial aircraft age.
The sellers of the aircraft will retain their respective reserve accounts
with respect to maintenance reserve payments, if any, on the initial aircraft.
Maintenance obligations will be paid from funds on deposit in the collections
account and, to the extent available for those purposes, funds obtained from any
cash collateral accounts or under eligible credit facilities that may be
established in the future. LIFT cannot assure you that cash flows generated from
the initial aircraft will be sufficient to satisfy its maintenance obligations,
to pay its expenses and to service interest and principal on the notes. See
"Risk Factors--Risks Relating to Cash Flows" and "--Risks Relating to
Collections under Leases".
If LIFT acquires any additional aircraft, it will not use operational cash
flow to pay for additional aircraft but, instead, LIFT will issue additional
notes, additional equity interests or both to fund any of these purchases. Any
additional notes must be issued in compliance with the limitations set forth
under "Description of the Notes--Indenture Covenants--Limitation on
Indebtedness", and any additional equity interests must be issued in compliance
with the limitations set forth in "Description of the Notes--Indenture
Covenants--Limitation on the Issuance, Delivery and Sale of Equity Interests".
87
<Page>
RESULTS OF OPERATIONS
On June 26, 2001, LIFT began operations through the acquisition of LIFT 1
and its subsidiaries. LIFT 1 and its subsidiaries had concurrently agreed to
acquire 39 commercial jet aircraft, which are subject to operating leases. As of
June 30, 2001, 31 of those aircraft had been delivered. The proceeds from the
issuance of the initial notes financed the acquisition of LIFT 1 and repaid
bridge notes issued by LIFT 1 to pay for the aircraft.
The LIFT group reported a net loss of $0.2 million for the period from
June 13, 2001 to June 30, 2001, on total revenues of $2.1 million. The LIFT
group's revenues consisted of rental income from operating leases, other income
representing cash in lieu of rental payments received from the General Electric
Capital Corporation and the other sellers and interest income earned on cash
balances. Rental income from operating leases for the period from June 13, 2001
to June 30, 2001 amounted to $1.5 million.
The LIFT group's expenses for the period from June 13, 2001 to June 30, 2001
consisted of interest expense, depreciation and amortization expense and
administration and other expenses.
Interest expense on the notes amounted to $1.3 million for the period from
June 13, 2001 to June 30, 2001. Depreciation and amortization expense on the
aircraft and debt placement costs for the period from June 13, 2001 to June 30,
2001 was $0.5 million.
Administrative and other expenses consisted of fees and reimbursements paid
to the servicer and other service providers as well as other expenses.
Administrative and other expenses for the period from June 13, 2001 to June 30,
2001 were $0.5 million.
CASH RESERVES AND LIQUIDITY
Cash reserves as of the date of this prospectus are approximately
$83.0 million. Cash reserves provide a source of liquidity to pay ongoing
expenses, amounts due under senior swap agreements and interest on the notes. If
cash reserves fall below $33.0 million, LIFT may continue to pay ongoing
expenses, senior swap amounts and interest on the Class A Notes but may not make
any payments having a lower payment priority until the reserves have been
replenished to that amount. Similar cash reserve levels have been set as to
provide liquidity in respect of the Class B Notes, the Class C Notes and the
Class D Notes and are available for all payments that rank equal or prior to the
payment of interest on the relevant class of notes. The reserve levels will
reduce as principal is paid; in addition, LIFT has the right to reduce the
levels further if it obtains confirmation from the rating agencies that they
will not lower, qualify or withdraw their ratings of the initial notes as a
result.
LIFT may put in place cash collateral accounts and other eligible credit
facilities from time to time. Each of these facilities, if put in place, may be
designated by the controlling trustees of LIFT as a senior eligible credit
facility, a mezzanine eligible credit facility, a junior eligible credit
facility or a subordinate eligible credit facility. Amounts available under
these accounts or other facilities may be credited against the reserve levels
noted in the prior paragraph. Amounts drawn under any these facilities will be
repayable or replenished in the order of priority set forth in "Description of
the Notes--Priority of Payments". As of the date of this prospectus, there were
no cash collateral accounts or other eligible credit facilities.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest incurred by LIFT on the notes and the yield from rental income
received by LIFT and its subsidiaries under operating leases are based on
combinations of variable and fixed measures of interest rates. LIFT and its
subsidiaries are exposed to interest rate risk to the extent that the mix of
variable and fixed interest obligations under the notes do not correlate to the
mix of variable and fixed yields from rental income under leases. LIFT has
engaged advisors to monitor interest rates continually
88
<Page>
in order to mitigate its exposure to unfavorable variations. LIFT and its
subsidiaries will utilize one or more interest rate swaps that shift the risk of
fluctuations in floating rates to a counterparty in exchange for fixed payments
by LIFT and its subsidiaries. Risks in the use of these instruments arise from
the possible inability of the counterparties to meet the terms of their
contracts and from market movements in securities values and interest rates.
Counterparty risk will be monitored on an ongoing basis and the counterparties
will be subject to the prior approval of the controlling trustees. The
counterparties will consist primarily of the affiliates of major United States
and European financial institutions and special-purpose derivative vehicles that
will have credit ratings, or will provide collateralization arrangements,
consistent with maintaining the ratings of the notes.
As of the date of this prospectus, LIFT is a party to a single
floating-to-fixed interest rate swap with an affiliate of Credit Suisse First
Boston under which LIFT and its subsidiaries receive payment based on one-month
LIBOR and pay a fixed monthly rate, each measured against an amortizing notional
balance. The following table presents, as of June 30, 2001, the terms of LIFT's
swap agreement:
<Table>
<Caption>
INITIAL FIXED MONTHLY
NOTIONAL BALANCE EFFECTIVE DATE MATURITY DATE PAY RATE
--------------------- -------------- ------------- -------------
$1,224,020,000 June 26, 2001 June 15, 2011 5.790%
</Table>
The master swap agreement of LIFT is attached as Exhibit 10.6 to the
Registration Statement of which this prospectus forms a part. In the future,
LIFT and its subsidiaries expect to seek to enter into additional swaps or sell
at market value or unwind part or all of then existing interest rate swaps in
order to rebalance the mix of variable and fixed interest obligations and the
variable and fixed yield from rental income under the leases. See "Note Payment
Assumptions" for tables reflecting assumed changes in the yields and expected
weighted lives of the exchange notes and their expected maturities based on
assumed changes in gross revenues, portfolio value and recession.
89
<Page>
NOTE PAYMENT ASSUMPTIONS
The indenture governing the notes does not provide for fixed principal
payments on any class of notes. No default results from the failure of principal
payments to be at least any amount except in the case of any principal still
unpaid on the final maturity date of a note. Rather, a portion of whatever
revenues are in fact collected are allocated to principal in accordance with the
order of payment priorities described under "Description of the Notes--Priority
of Payments." Thus, the principal to be paid on any payment date is entirely a
function of the revenues collected and costs incurred during the preceding
month.
Set forth below are assumptions made on June 13, 2001 about the revenues and
expenses of LIFT. LIFT has calculated the speed with which the principal of each
class of notes would be repaid if its revenues and expenses matched those
reflected in the assumptions described below. The speed of repayment for the
principal of any class is expressed both as its expected maturity and its
weighted average life. The expected maturity of a class of notes is the length
of time needed to pay off the entire principal of those notes, and its weighted
average life refers to the average length of time that any one dollar of
principal remains outstanding.
The tables below set forth this speed of repayment based on LIFT's
experience in the future matching the assumptions, or the assumed case.
Subsequent tables reflect changes in the speed of principal repayment in
comparison to the assumed case were actual experience to be more favorable or
less favorable than the assumed case based on selected variations in the
assumptions.
The tables also address the anticipated "yield" of the notes under those
assumptions and variations on assumptions. "Yield" refers to the interest rate
derived from the assumed amount of interest paid during the time the notes are
in fact or assumed to be outstanding, giving effect to any original issue
discount. This is distinct from the contractual interest rate and contractual
maturity.
The tables set forth below are designed to illustrate to the best of LIFT's
knowledge and belief, at June 13, 2001, some of the payment characteristics of
the notes and are not intended to be projections, estimates, forecasts or
forward-looking statements. The tables do not reflect all factors that may
affect the revenues and expenses of LIFT. Rather, they reflect those factors
that are likely to affect significantly the performance of LIFT in future years
and the timing of note repayments. If those factors have a more severe impact
than that assumed, payments of principal on the notes would be delayed or
decreased. Factors that could cause LIFT's actual revenues to differ materially
include those described below and under "LIFT" and the risks set forth under
"Risk Factors".
These tables were in the offering circular for the initial notes based on
information as of June 13, 2001. LIFT has not updated or revised the information
presented to reflect changes occurring after June 13, 2001 and does not intend
to do so. LIFT is currently unable to assess the effect of the economic and
possible political and military disruptions resulting from the recent terrorist
attacks in the United States on the information presented in this portion of
this prospectus.
It is highly likely that actual experience will vary from the possible
revenue scenarios represented by the tables. As a result, principal payments on
the notes will occur earlier or later than assumed, and the timing differences
may be substantial.
The prospective financial information in this prospectus was not prepared
with a view toward compliance with published guidelines of the Securities and
Exchange Commission or the guidelines established by the American Institute of
Certified Public Accountants for preparation and presentation of prospective
financial information.
90
<Page>
REVENUE ASSUMPTIONS:
LIFT used assumptions (1) to (11) below to estimate its gross monthly
revenue before interest payments, principal payments, swap payments, selling,
general and administrative expenses and before lost rental payments and
expenditures required due to aircraft downtime, lessee defaults, aircraft
repossession costs, bad debts and operating costs incurred in the ordinary
course of the operating lease business. See Appendix 3 to this prospectus for
further data regarding assumed gross revenue.
(1) One-month LIBOR remains constant at 5.80% per annum.
(2) LIFT's floating rate leases are assumed to reset based upon one-month
LIBOR.
(3) Aircraft coming off lease in the future are assumed to be re-leased at a
fixed monthly rate that is a function of the age of the aircraft on that date
and is calculated as the product of (i) the assumed aircraft value on that date
and (ii) the Assumed Monthly Lease Rate Factor described in Appendix 9. For
purposes of calculating the Assumed Monthly Lease Rate Factor, the initial
aircraft are divided into two separate categories: (1) narrowbody aircraft in
passenger configuration and (2) widebody aircraft in passenger configuration and
the aircraft in freighter configuration.
(4) Aircraft are assumed to be disposed of at the end of 30 years from the
original date of manufacture and generate zero sale proceeds.
(5) Future lease terms are assumed to be 5 years.
(6) No new purchase options with respect to the aircraft are granted to
lessees by LIFT, and no existing purchase options are exercised.
(7) No new lease termination or extension options are granted to lessees by
LIFT, and no existing termination or extension options are exercised.
(8) All 39 initial aircraft are delivered to LIFT between the closing date
and 210 days later.
(9) LIFT acquires no additional aircraft and issues no additional notes.
(10) Security deposits and aircraft modification payments are zero.
(11) Distributions on the notes are made on the 15th day of each month and
the calculation date is assumed to be the 4th business day prior to the 15th day
of the month, regardless of the day on which these actually occur.
INTEREST, EXPENSE, OPERATING COST AND OTHER REINVESTMENT ASSUMPTIONS:
(12) The initial notes are issued in amounts and with coupons as set forth
in the following table and payments are made in accordance with the payment
priorities set forth under "Description of the Notes--Priority of Payments".
<Table>
<Caption>
AMOUNT
CLASS OF INITIAL NOTES (MILLIONS) MONTHLY COUPON
---------------------- ---------- ----------------------------------------
Class A-1 Notes......................... $400.0 one-month LIBOR + 0.390%
Class A-2 Notes......................... $260.0 one-month LIBOR + 0.430%
Class A-3 Notes......................... $425.0 one-month LIBOR + 0.430%
Class B-1 Notes......................... $ 60.0 one-month LIBOR + 1.120%
Class B-2 Notes......................... $ 83.0 7.124%
Class C-1 Notes......................... $ 69.0 one-month LIBOR + 2.120%
Class C-2 Notes......................... $ 72.0 8.093%
Class D-1 Notes......................... $ 35.0 one month LIBOR + 2.000%
Class D-2 Notes......................... $ 25.0 8.000%
</Table>
91
<Page>
(13) Refinancing notes are issued and sold on the expected final payment
dates of each of the Class A-1 Notes and Class A-2 Notes respectively and on
each of the subsequent expected final payment dates of any such refinancing
notes on the same terms with respect to priority, coupon and redemption as the
initial Class A-1 Notes and Class A-2 Notes and with maturities and amortization
schedules paid with the application of the required payment priorities. Issuance
expenses are 0.50% of the outstanding principal balance.
(14) All contracted and assumed future payments in respect of the leases are
timely received by LIFT and 15 days of investment income are earned at one-month
LIBOR minus 0.25% on those amounts each month. Cash reserves on deposit in the
collection account are assumed to earn investment income at one-month LIBOR
minus 0.25% on those amounts each month.
(15) The servicer's fees are as described under "LIFT--The Servicing
Agreement--The Servicer". The other selling, general and administrative expenses
of LIFT and its subsidiaries in the amount of $2.1 million per year are deducted
from gross revenue and include fees to the administrative agent, the financial
advisor and the capital markets advisor.
(16) Gross revenues are reduced each year by 3.50% to account for contingent
costs, including insurance expenses, aircraft re-leasing costs, leasing
transaction expenses and maintenance expenditures net of maintenance reserve
receipts.
(17) LIFT makes and receives swap payments in accordance with the swap
agreements in place on June 26, 2001, and LIFT enters into no additional swaps.
ASSUMED STRESS CASE SCENARIO
The assumed case reflects an annual reduction in gross revenues of 8.0%.
This 8.0% reduction is a combination of a 3.5% reduction due to contingent costs
described in assumption (16) and 4.5% reduction resulting from specified factors
impairing, or putting strains upon, the collection of revenues. Those factors,
which are referred to as "stresses" or "stress factors", are: AOG, lessee
defaults, aircraft repossession costs and bad debts. AOG is an acronym for
"Aircraft On the Ground" and is reflected as turnover and remarketing time. The
calculation detail of the assumed reduction in revenues is set forth below.
<Table>
A: Weighted Average Portfolio 20% per annum (Assumption (5))
Turnover:
B: Average Re-marketing Time: 4 weeks (0.08 years)
C: Weighted Average Default Rate: 4% per annum
D: Average Repossession Time: 14 weeks (0.27 years)
E: Weighted Average Bad Debt Expense: 1% per annum
F: Average Repossession Cost: $500,000
G: Average Annual Gross Revenue Per $3,900,000
Aircraft:
</Table>
Aircraft on Ground = (A X B) + (C X (B + D))
Annual Repossession Expense ("ARE") = (C X (F/G))
<Table>
AOG=(20% X 0.08 yrs) + (4% X (0.08 yrs + 0.27 yrs))......... 3.0%
ARE (4% X ($500,000/$3,900,000))............................ 0.5%
Bad Debt Expense............................................ 1.0%
Stress Related Gross Revenue Reduction...................... 4.5%
Contingent Costs............................................ 3.5%
Gross Revenue Reduction in the assumed case................. 8.0%
</Table>
92
<Page>
More severe stress factors would result in a greater annual reduction in
gross revenues. The following table shows the effect upon gross revenues if the
severity of each one of the stress factors outlined in the above example is in
turn doubled from those in the prior table but the other stress factors remain
as set forth above.
<Table>
<Caption>
GROSS REVENUE
STRESS SEVERITY REDUCTION
------ -------- -------------
Portfolio Turnover.......................................... 40% per annum 9.6%
Re-marketing Time........................................... 8 weeks 9.7%
Default Rate................................................ 8% per annum 9.9%
Repossession Time........................................... 28 weeks 9.1%
Bad Debt Expense............................................ 2% per annum 9.0%
Repossession Expense........................................ $1,600,000 9.1%
</Table>
PRINCIPAL REPAYMENTS UNDER THE ASSUMED CASE
The table below shows, for each payment date presented, the percentage of
the initial outstanding principal balance of the aggregate classes of notes
expected to be outstanding on that payment date based on the assumptions set out
above.
PERCENT OF INITIAL PRINCIPAL BALANCE OF THE INITIAL NOTES BASED ON THE ASSUMED
CASE
<Table>
<Caption>
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
PAYMENT DATE A-1 A-2 A-3 B-1 B-2 C-1 C-2
OCCURRING IN JUNE NOTES NOTES NOTES NOTES NOTES NOTES NOTES
-------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
2001 (Closing Date)............. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
July 15, 2002................... 100.00% 100.00% 89.33% 95.82% 95.82% 99.78% 99.78%
July 15, 2003................... 0.00% 100.00% 80.96% 92.54% 92.54% 96.36% 96.36%
July 15, 2004................... 0.00% 0.00% 71.90% 88.99% 88.99% 92.67% 92.67%
July 15, 2005................... 0.00% 0.00% 61.96% 85.10% 85.10% 88.61% 88.61%
July 15, 2006................... 0.00% 0.00% 51.24% 80.90% 80.90% 84.24% 84.24%
July 15, 2007................... 0.00% 0.00% 39.81% 76.42% 76.42% 79.58% 79.58%
July 15, 2008................... 0.00% 0.00% 27.55% 71.62% 71.62% 74.58% 74.58%
July 15, 2009................... 0.00% 0.00% 14.40% 66.47% 66.47% 69.21% 69.21%
July 15, 2010................... 0.00% 0.00% 0.38% 60.98% 60.98% 63.50% 63.50%
July 15, 2011................... 0.00% 0.00% 0.00% 55.14% 55.14% 57.42% 57.42%
July 15, 2012................... 0.00% 0.00% 0.00% 48.95% 48.95% 50.97% 50.97%
July 15, 2013................... 0.00% 0.00% 0.00% 42.31% 42.31% 44.06% 44.06%
July 15, 2014................... 0.00% 0.00% 0.00% 35.30% 35.30% 36.76% 36.76%
July 15, 2015................... 0.00% 0.00% 0.00% 27.88% 27.88% 29.03% 29.03%
July 15, 2016................... 0.00% 0.00% 0.00% 20.01% 20.01% 20.83% 20.83%
July 15, 2017................... 0.00% 0.00% 0.00% 11.72% 11.72% 12.20% 12.20%
July 15, 2018................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
July 15, 2019................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
July 15, 2020................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life........... 2.05 yrs. 3.05 yrs. 4.96 yrs. 10.20 yrs. 10.20 yrs. 10.60 yrs. 10.60 yrs.
<Caption>
CLASS CLASS
PAYMENT DATE D-1 D-2
OCCURRING IN JUNE NOTES NOTES
-------------------------------- ---------- ----------
2001 (Closing Date)............. 100.00% 100.00%
July 15, 2002................... 99.78% 99.78%
July 15, 2003................... 96.36% 96.36%
July 15, 2004................... 92.67% 92.67%
July 15, 2005................... 88.61% 88.61%
July 15, 2006................... 84.24% 84.24%
July 15, 2007................... 79.58% 79.58%
July 15, 2008................... 74.58% 74.58%
July 15, 2009................... 69.21% 69.21%
July 15, 2010................... 63.50% 63.50%
July 15, 2011................... 57.42% 57.42%
July 15, 2012................... 50.97% 50.97%
July 15, 2013................... 44.06% 44.06%
July 15, 2014................... 36.76% 36.76%
July 15, 2015................... 29.03% 29.03%
July 15, 2016................... 20.83% 20.83%
July 15, 2017................... 12.20% 12.20%
July 15, 2018................... 0.00% 0.00%
July 15, 2019................... 0.00% 0.00%
July 15, 2020................... 0.00% 0.00%
Weighted Average Life........... 10.60 yrs. 10.60 yrs.
</Table>
------------------------
(1) See Appendices 3 and 6, respectively, for further data regarding gross
revenue and pool factors.
(2) The weighted average life of a note equals (a) the sum of the products on
each payment date of the principal payment assumed to be made on that payment
date and the number of years from the date of issuance of that note to that
payment date (b) divided by the initial principal balance of that note.
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<Page>
DECLINING BALANCES OF THE INITIAL NOTES AND ASSUMED COLLATERAL VALUE*
BASED ON THE ASSUMED CASE
OUTSTANDING PRINCIPAL BALANCE
VS.
ASSUMED COLLATERAL VALUE
------------------------
* "Collateral Value" is the sum of (1) the assumed value for each aircraft at
that date and (2) cash reserves equal to the amount of cash reserves assumed to
exist based on the Assumed Case.
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL NOTES
MINIMUM REVENUE PERCENTAGE REQUIRED TO RETIRE THE INITIAL NOTES
The table below indicates the minimum percentage of gross revenue that will
be necessary to repay all interest and principal on each class of notes by its
respective final maturity date. If the actual revenue received by LIFT and its
subsidiaries were to fall below the percentages of gross revenue indicated below
and all of the other assumptions proved correct, LIFT would be unable to meet
its required payment obligations on the final maturity dates of the note, which
would constitute an event of default.
PERCENTAGE OF GROSS REVENUE NECESSARY TO REPAY THE INITIAL NOTES
BY THE APPLICABLE FINAL MATURITY DATE ASSUMING ACTUAL EXPERIENCE
CORRESPONDS TO THE ASSUMED CASE UNTIL THE BEGINNING OF THE YEAR STATED
<Table>
<Caption>
CLOSING DATE YEAR 3 YEAR 6 YEAR 10
------------ -------- -------- --------
Class A Notes....................................... 58.27% 56.49% 53.33% 46.81%
Class B Notes....................................... 66.20% 64.09% 60.19% 52.12%
Class C Notes....................................... 75.46% 73.04% 68.22% 58.06%
Class D Notes....................................... 78.84% 76.31% 71.17% 60.35%
</Table>
EFFECT OF A PERMANENT CHANGE IN GROSS REVENUE
LIFT prepared the tables below based on the assumptions, except that it
varied the revenues received by LIFT and its subsidiaries from assumed gross
revenues by the indicated percentages, beginning in years 3, 6 and 9. If LIFT
receives actual revenues as indicated below and all of the other assumptions
proved correct, then the expected maturities, weighted average lives and yields
of the respective classes of notes would be as set forth below.
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<Page>
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL NOTES
ASSUMING A PERMANENT CHANGE IN GROSS REVENUE BEGINNING IN YEAR 3
<Table>
<Caption>
PERMANENT CHANGE IN GROSS REVENUE
---------------------------------------------------------------
10% 0% -8%*
------------------- ------------------- -------------------
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Class A-1 Notes..................... 2.05 2.05 2.05 2.05 2.05 2.05
Class A-2 Notes..................... 3.05 3.05 3.05 3.05 3.05 3.05
Class A-3 Notes..................... 6.55 3.78 7.72 4.30 9.14 4.96
Class B-1 Notes..................... 12.72 9.25 14.72 9.88 16.89 10.20
Class B-2 Notes..................... 12.72 9.25 14.72 9.88 16.89 10.20
Class C-1 Notes..................... 12.97 9.71 14.80 10.30 16.89 10.60
Class C-2 Notes..................... 12.97 9.71 14.80 10.30 16.89 10.60
Class D-1 Notes..................... 13.05 9.76 14.89 10.31 16.89 10.60
Class D-2 Notes..................... 13.05 9.76 14.89 10.31 16.89 10.60
<Caption>
PERMANENT CHANGE IN GROSS REVENUE
-----------------------------------------
-15% -20%
------------------- -------------------
EXP AVG EXP AVG
-------- -------- -------- --------
Class A-1 Notes..................... 2.05 2.05 2.05 2.05
Class A-2 Notes..................... 3.05 3.05 3.05 3.05
Class A-3 Notes..................... 10.22 5.47 10.22 5.47
Class B-1 Notes..................... 19.64 10.96 22.47 11.02
Class B-2 Notes..................... 19.64 10.96 22.47 11.02
Class C-1 Notes..................... 19.64 11.34 22.55 15.20
Class C-2 Notes..................... 19.64 11.34 22.55 15.20
Class D-1 Notes..................... 19.64 15.12 23.22 22.01
Class D-2 Notes..................... 19.64 15.12 23.22 22.01
</Table>
------------------------
* Assumed Case
YIELDS ON THE INITIAL NOTES
ASSUMING A PERMANENT CHANGE IN GROSS REVENUE BEGINNING IN YEAR 3
<Table>
<Caption>
PERMANENT CHANGE IN GROSS REVENUE
--------------------------------------------------------------------
10% 0% -8%* -15% -20%
-------- -------- -------- -------- --------
Class A-1 Notes............................ 6.190% 6.190% 6.190% 6.190% 6.190%
Class A-2 Notes............................ 6.230% 6.230% 6.230% 6.230% 6.230%
Class A-3 Notes............................ 6.230% 6.230% 6.230% 6.230% 6.230%
Class B-1 Notes............................ 6.920% 6.920% 6.920% 6.920% 6.920%
Class B-2 Notes............................ 7.125% 7.125% 7.125% 7.124% 7.124%
Class C-1 Notes............................ 7.920% 7.920% 7.920% 7.920% 7.920%
Class C-2 Notes............................ 8.094% 8.094% 8.094% 8.094% 8.093%
Class D-1 Notes............................ 12.958% 12.846% 12.800% 11.666% 9.865%
Class D-2 Notes............................ 13.053% 12.944% 12.898% 11.792% 10.022%
</Table>
------------------------
* Assumed Case
95
<Page>
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL NOTES
ASSUMING A PERMANENT CHANGE IN GROSS REVENUE BEGINNING IN YEAR 6
<Table>
<Caption>
PERMANENT CHANGE IN GROSS REVENUE
---------------------------------------------------------------
10% 0% -8%*
------------------- ------------------- -------------------
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Class A-1 Notes.................... 2.05 2.05 2.05 2.05 2.05 2.05
Class A-2 Notes.................... 3.05 3.05 3.05 3.05 3.05 3.05
Class A-3 Notes.................... 7.72 4.57 8.39 4.75 9.14 4.96
Class B-1 Notes.................... 13.80 9.63 15.30 10.01 16.89 10.20
Class B-2 Notes.................... 13.80 9.63 15.30 10.01 16.89 10.20
Class C-1 Notes.................... 13.97 10.06 15.39 10.42 16.89 10.60
Class C-2 Notes.................... 13.97 10.06 15.39 10.42 16.89 10.60
Class D-1 Notes.................... 14.05 10.10 15.39 10.43 16.89 10.60
Class D-2 Notes.................... 14.05 10.10 15.39 10.43 16.89 10.60
<Caption>
PERMANENT CHANGE IN GROSS REVENUE
-----------------------------------------
-15% -20%
------------------- -------------------
EXP AVG EXP AVG
-------- -------- -------- --------
Class A-1 Notes.................... 2.05 2.05 2.05 2.05
Class A-2 Notes.................... 3.05 3.05 3.05 3.05
Class A-3 Notes.................... 10.22 5.22 10.22 5.34
Class B-1 Notes.................... 18.72 10.88 20.72 10.99
Class B-2 Notes.................... 18.72 10.88 20.72 10.99
Class C-1 Notes.................... 18.72 11.26 20.72 11.54
Class C-2 Notes.................... 18.72 11.26 20.72 11.54
Class D-1 Notes.................... 18.72 11.42 20.72 15.35
Class D-2 Notes.................... 18.72 11.42 20.72 15.35
</Table>
------------------------
* Assumed Case
YIELDS ON THE INITIAL NOTES
ASSUMING A PERMANENT CHANGE IN GROSS REVENUE BEGINNING IN YEAR 6
<Table>
<Caption>
PERMANENT CHANGE IN GROSS REVENUE
--------------------------------------------------------------------
10% 0% -8%* -15% -20%
-------- -------- -------- -------- --------
Class A-1 Notes............................ 6.190% 6.190% 6.190% 6.190% 6.190%
Class A-2 Notes............................ 6.230% 6.230% 6.230% 6.230% 6.230%
Class A-3 Notes............................ 6.230% 6.230% 6.230% 6.230% 6.230%
Class B-1 Notes............................ 6.920% 6.920% 6.920% 6.920% 6.920%
Class B-2 Notes............................ 7.125% 7.125% 7.125% 7.125% 7.124%
Class C-1 Notes............................ 7.920% 7.920% 7.920% 7.920% 7.920%
Class C-2 Notes............................ 8.094% 8.094% 8.094% 8.094% 8.094%
Class D-1 Notes............................ 12.887% 12.827% 12.800% 12.639% 11.661%
Class D-2 Notes............................ 12.983% 12.925% 12.898% 12.741% 11.782%
</Table>
------------------------
* Assumed Case
96
<Page>
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL NOTES
ASSUMING A PERMANENT CHANGE IN GROSS REVENUE BEGINNING IN YEAR 9
<Table>
<Caption>
PERMANENT CHANGE IN GROSS REVENUE
---------------------------------------------------------------
10% 0% -8%
------------------- ------------------- -------------------
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Class A-1 Notes.................... 2.05 2.05 2.05 2.05 2.05 2.05
Class A-2 Notes.................... 3.05 3.05 3.05 3.05 3.05 3.05
Class A-3 Notes.................... 8.80 4.93 8.97 4.94 9.14 4.96
Class B-1 Notes.................... 14.80 9.90 15.80 10.10 16.89 10.20
Class B-2 Notes.................... 14.80 9.90 15.80 10.10 16.89 10.20
Class C-1 Notes.................... 14.89 10.31 15.89 10.50 16.89 10.60
Class C-2 Notes.................... 14.89 10.31 15.89 10.50 16.89 10.60
Class D-1 Notes.................... 14.89 10.32 15.89 10.51 16.89 10.60
Class D-2 Notes.................... 14.89 10.32 15.89 10.51 16.89 10.60
<Caption>
PERMANENT CHANGE IN GROSS REVENUE
-----------------------------------------
-15% -20%
------------------- -------------------
EXP AVG EXP AVG
-------- -------- -------- --------
Class A-1 Notes.................... 2.05 2.05 2.05 2.05
Class A-2 Notes.................... 3.05 3.05 3.05 3.05
Class A-3 Notes.................... 10.22 4.97 10.22 4.99
Class B-1 Notes.................... 18.05 10.78 19.22 10.89
Class B-2 Notes.................... 18.05 10.78 19.22 10.89
Class C-1 Notes.................... 18.05 11.17 19.22 11.28
Class C-2 Notes.................... 18.05 11.17 19.22 11.28
Class D-1 Notes.................... 18.05 11.30 19.22 11.42
Class D-2 Notes.................... 18.05 11.30 19.22 11.42
</Table>
------------------------
* Assumed Case
YIELDS ON THE INITIAL NOTES
ASSUMING A PERMANENT CHANGE IN GROSS REVENUE BEGINNING IN YEAR 9
<Table>
<Caption>
PERMANENT CHANGE IN GROSS REVENUE
----------------------------------------------------------------
10.0% 0.0% -8.0%* -15.0% -20.0%
-------- -------- -------- -------- --------
Class A-1 Notes............................... 6.190% 6.190% 6.190% 6.190% 6.190%
Class A-2 Notes............................... 6.230% 6.230% 6.230% 6.230% 6.230%
Class A-3 Notes............................... 6.230% 6.230% 6.230% 6.230% 6.230%
Class B-1 Notes............................... 6.920% 6.920% 6.920% 6.920% 6.920%
Class B-2 Notes............................... 7.125% 7.125% 7.125% 7.125% 7.125%
Class C-1 Notes............................... 7.920% 7.920% 7.920% 7.920% 7.920%
Class C-2 Notes............................... 8.094% 8.094% 8.094% 8.094% 8.094%
Class D-1 Notes............................... 12.844% 12.814% 12.800% 12.670% 12.658%
Class D-2 Notes............................... 12.942% 12.912% 12.898% 12.771% 12.760%
</Table>
------------------------
* Assumed Case
EFFECT OF PERMANENT DECLINE IN PORTFOLIO VALUE
If the value of LIFT's portfolio of aircraft as adjusted for appraisals is
significantly less than the value assumed, the Scheduled Principal Payment
Amount payable to holders of the Class A Notes may increase. Payment of that
increased amount may shorten the weighted average lives of the Class A Notes and
lengthen the weighted average lives of the classes of notes that have a lower
payment priority. The following tables show the expected maturity and weighted
average life of each class of notes if the Adjusted Portfolio Value permanently
declined to a given percentage of the assumed portfolio value, beginning in
years 1 and 5, respectively.
97
<Page>
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL NOTES
ASSUMING A PERMANENT CHANGE IN PORTFOLIO VALUE BEGINNING IN YEAR 1
<Table>
<Caption>
ADJUSTED PORTFOLIO VALUE AS PERCENTAGE OF
ASSUMED PORTFOLIO VALUE BEGINNING IN YEAR 1
-------------------------------------------------------------------------------------
100%* 90% 80% 70%
------------------- ------------------- ------------------- -------------------
EXP AVG EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- -------- -------- --------
Class A-1 Notes..................... 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05
Class A-2 Notes..................... 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05
Class A-3 Notes..................... 9.14 4.96 9.05 4.91 9.05 4.91 9.05 4.91
Class B-1 Notes..................... 16.89 10.20 16.89 10.29 16.89 10.52 16.89 10.59
Class B-2 Notes..................... 16.89 10.20 16.89 10.29 16.89 10.52 16.89 10.59
Class C-1 Notes..................... 16.89 10.60 16.97 10.72 16.89 10.98 16.89 11.01
Class C-2 Notes..................... 16.89 10.60 16.97 10.72 16.89 10.98 16.89 11.01
Class D-1 Notes..................... 16.89 10.60 16.97 11.06 16.89 11.18 16.97 11.18
Class D-2 Notes..................... 16.89 10.60 16.97 11.06 16.89 11.18 16.97 11.18
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL NOTES
ASSUMING A PERMANENT CHANGE IN PORTFOLIO VALUE BEGINNING IN YEAR 5
<Table>
<Caption>
ADJUSTED PORTFOLIO VALUE AS PERCENTAGE OF
ASSUMED PORTFOLIO VALUE BEGINNING IN YEAR 5
-------------------------------------------------------------------------------------
100%* 90% 80% 70%
------------------- ------------------- ------------------- -------------------
EXP AVG EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- -------- -------- --------
Class A-1 Notes..................... 2.05 2.05 2.05 2.05 2.05 2.05 2.05 2.05
Class A-2 Notes..................... 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05
Class A-3 Notes..................... 9.14 4.96 9.05 4.92 9.05 4.92 9.05 4.92
Class B-1 Notes..................... 16.89 10.20 16.89 10.27 16.89 10.50 16.89 10.57
Class B-2 Notes..................... 16.89 10.20 16.89 10.27 16.89 10.50 16.89 10.57
Class C-1 Notes..................... 16.89 10.60 16.97 10.71 16.89 10.97 16.89 11.00
Class C-2 Notes..................... 16.89 10.60 16.97 10.71 16.89 10.97 16.89 11.00
Class D-1 Notes..................... 16.89 10.60 16.97 11.04 16.89 11.17 16.97 11.17
Class D-2 Notes..................... 16.89 10.60 16.97 11.04 16.89 11.17 16.97 11.17
</Table>
------------------------
* Assumed Case
EFFECT OF CYCLICAL VARIATIONS IN GROSS REVENUE AND PORTFOLIO VALUE--"RECESSION
SCENARIOS"
Historically, the aviation industry has experienced cyclical swings in the
supply and demand for aircraft. LIFT would be negatively affected by a decline
in the demand for aircraft. LIFT has assumed that such a decline or "recession",
as used in this discussion, will result in a decline in aircraft values and an
increase in defaults and downtime, as well as a decline in operating lease
rental rates. In that event gross revenues would decline.
LIFT prepared the following tables to show the effect on expected maturities
and weighted average lives of the Class A-3, Class B-1, Class B-2, Class C-1,
Class C-2, Class D-1 and Class D-2 if
98
<Page>
recessions of different lengths occurred. In preparing the following tables LIFT
assumed that a recession would have the following effect on LIFT and its
subsidiaries:
(1) Aircraft values fall on the first day of the recession to a given
percentage of the assumed portfolio value. This decrease would trigger an
increase in Scheduled Principal Payment Amounts on the Class A Notes.
(2) Gross revenues fall by a given percentage on the first day of the
recession as aircraft are re-leased or lessees default. This would result in
less cash flow being available to make payments of interest and principal on the
notes.
(3) The recession lasts a given period of time. After that the adjusted
portfolio value returns to the assumed portfolio value and the gross revenue
returns to the assumed case on the first day after the recession. LIFT cannot,
however, assure you that periods of weak traffic growth and lower demand for
aircraft will be followed by periods of strong growth and high demand for
aircraft or that following a recession aircraft values and gross revenues will
return to assumed case levels.
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS A-3
NOTES ASSUMING A RECESSION LASTING THREE YEARS
<Table>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO
VALUE..................................................... 100% 100%* 90%
DECLINE IN GROSS REVENUE.................................... 0% 8%* 10%
ADJUSTED PORTFOLIO AS A PERCENTA
VALUE......................... 80%
DECLINE IN GROSS REVENUE........ 20%
</Table>
<Table>
<Caption>
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year.......................... 1 (Closing Date) 8.22 4.21 9.14 4.96 10.22 5.12
3 8.30 4.43 9.14 4.96 10.22 5.06
5 8.39 4.65 9.14 4.96 10.22 5.01
10 9.14 4.96 9.14 4.96 9.14 4.96
<Caption>
EXP AVG
-------- --------
Recession begins at start of
Year.......................... 10.22 5.49
10.22 5.47
10.22 5.40
9.14 4.96
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS B-1
NOTES ASSUMING A RECESSION LASTING THREE YEARS
<Table>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO
VALUE..................................................... 100% 100%* 90%
DECLINE IN GROSS REVENUE.................................... 0% 8%* 10%
ADJUSTED PORTFOLIO AS A PERCENTA
VALUE......................... 80%
DECLINE IN GROSS REVENUE........ 20%
</Table>
<Table>
<Caption>
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year.......................... 1 (Closing Date) 16.14 10.14 16.89 10.20 17.14 10.53
3 16.22 10.15 16.89 10.20 17.14 10.48
5 16.30 10.16 16.89 10.20 17.05 10.42
10 16.47 10.17 16.89 10.20 17.05 10.30
<Caption>
EXP AVG
-------- --------
Recession begins at start of
Year.......................... 18.14 10.84
17.97 10.82
17.80 10.79
17.55 10.70
</Table>
------------------------
* Assumed Case
99
<Page>
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS B-2
NOTES ASSUMING A RECESSION LASTING THREE YEARS
<Table>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO
VALUE..................................................... 100% 100%* 90%
DECLINE IN GROSS REVENUE.................................... 0% 8%* 10%
ADJUSTED PORTFOLIO AS A PERCENTA
VALUE......................... 80%
DECLINE IN GROSS REVENUE........ 20%
</Table>
<Table>
<Caption>
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year.......................... 1 (Closing Date) 16.14 10.14 16.89 10.20 17.14 10.53
3 16.22 10.15 16.89 10.20 17.14 10.48
5 16.30 10.16 16.89 10.20 17.05 10.42
10 16.47 10.17 16.89 10.20 17.05 10.30
<Caption>
EXP AVG
-------- --------
Recession begins at start of
Year.......................... 18.14 10.84
17.97 10.82
17.80 10.79
17.55 10.70
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS C-1
NOTES ASSUMING A RECESSION LASTING THREE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year........................... 1 (Closing Date) 16.14 10.54 16.89 10.60 17.14 11.05
3 16.22 10.55 16.89 10.60 17.14 11.04
5 16.30 10.56 16.89 10.60 17.14 11.02
10 16.47 10.57 16.89 10.60 17.05 10.91
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 18.14 11.41
17.97 11.29
17.89 11.18
17.55 11.09
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS C-2
NOTES ASSUMING A RECESSION LASTING THREE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year........................... 1 (Closing Date) 16.14 10.54 16.89 10.60 17.14 11.05
3 16.22 10.55 16.89 10.60 17.14 11.04
5 16.30 10.56 16.89 10.60 17.14 11.02
10 16.47 10.57 16.89 10.60 17.05 10.91
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 18.14 11.41
17.97 11.29
17.89 11.18
17.55 11.09
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS D-1
NOTES ASSUMING A RECESSION LASTING THREE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year........................... 1 (Closing Date) 16.14 10.54 16.89 10.60 17.14 11.23
3 16.22 10.55 16.89 10.60 17.14 11.22
5 16.30 10.56 16.89 10.60 17.14 11.20
10 16.47 10.57 16.89 10.60 17.05 11.11
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 18.14 13.24
18.05 12.52
17.89 11.70
17.55 11.21
</Table>
------------------------
* Assumed Case
100
<Page>
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS D-2
NOTES ASSUMING A RECESSION LASTING THREE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year........................... 1 (Closing Date) 16.14 10.54 16.89 10.60 17.14 11.23
3 16.22 10.55 16.89 10.60 17.14 11.22
5 16.30 10.56 16.89 10.60 17.14 11.20
10 16.47 10.57 16.89 10.60 17.05 11.11
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 18.14 13.24
18.05 12.52
17.89 11.70
17.55 11.21
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS A-3 NOTES
NOTES ASSUMING A RECESSION LASTING FIVE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year........................... 1 (Closing Date) 7.72 3.95 9.14 4.96 10.22 5.21
3 7.89 4.31 9.14 4.96 10.22 5.11
5 8.14 4.63 9.14 4.96 10.22 5.03
10 9.14 4.96 9.14 4.96 9.14 4.96
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 10.22 5.49
10.22 5.47
10.22 5.40
9.14 4.96
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS B-1
NOTES ASSUMING A RECESSION LASTING FIVE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year........................... 1 (Closing Date) 15.64 10.07 16.89 10.20 17.22 10.68
3 15.80 10.10 16.89 10.20 17.22 10.65
5 15.89 10.11 16.89 10.20 17.14 10.60
10 16.22 10.14 16.89 10.20 17.14 10.42
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 19.14 10.93
18.80 10.90
18.47 10.86
17.97 10.76
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS B-2
NOTES ASSUMING A RECESSION LASTING FIVE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year........................... 1 (Closing Date) 15.64 10.07 16.89 10.20 17.22 10.68
3 15.80 10.10 16.89 10.20 17.22 10.65
5 15.89 10.11 16.89 10.20 17.14 10.60
10 16.22 10.14 16.89 10.20 17.14 10.42
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 19.14 10.93
18.80 10.90
18.47 10.86
17.97 10.76
</Table>
------------------------
* Assumed Case
101
<Page>
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS C-1
NOTES ASSUMING A RECESSION LASTING FIVE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of
Year........................... 1 (Closing Date) 15.72 10.48 16.89 10.60 17.22 11.07
3 15.80 10.50 16.89 10.60 17.22 11.07
5 15.97 10.52 16.89 10.60 17.22 11.05
10 16.22 10.55 16.89 10.60 17.14 11.00
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 19.14 12.06
18.80 11.78
18.47 11.42
17.97 11.15
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS C-2
NOTES ASSUMING A RECESSION LASTING FIVE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of Year 1 (Closing Date) 15.72 10.48 16.89 10.60 17.22 11.07
3 15.80 10.50 16.89 10.60 17.22 11.07
5 15.97 10.52 16.89 10.60 17.22 11.05
10 16.22 10.55 16.89 10.60 17.14 11.00
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of Year 19.14 12.06
18.80 11.78
18.47 11.42
17.97 11.15
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS D-1
NOTES ASSUMING A RECESSION LASTING FIVE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of (Closing
Year........................... 1 Date)......... 15.72 10.48 16.89 10.60 17.22 11.24
3 15.80 10.50 16.89 10.60 17.22 11.23
5 15.97 10.52 16.89 10.60 17.22 11.22
10 16.22 10.55 16.89 10.60 17.14 11.12
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 19.14 15.69
18.80 14.33
18.47 12.71
17.97 11.27
</Table>
------------------------
* Assumed Case
EXPECTED MATURITIES AND WEIGHTED AVERAGE LIVES OF THE INITIAL CLASS D-2
NOTES ASSUMING A RECESSION LASTING FIVE YEARS
<Table>
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE OF ASSUMED PORTFOLIO VALUE. 100% 100%* 90%
DECLINE IN GROSS REVENUE. 0% 8%* 10%
EXP AVG EXP AVG EXP AVG
-------- -------- -------- -------- -------- --------
Recession begins at start of (Closing
Year........................... 1 Date)......... 15.72 10.48 16.89 10.60 17.22 11.24
3 15.80 10.50 16.89 10.60 17.22 11.23
5 15.97 10.52 16.89 10.60 17.22 11.22
10 16.22 10.55 16.89 10.60 17.14 11.12
<Caption>
ADJUSTED PORTFOLIO AS A PERCENTAGE 80%
DECLINE IN GROSS REVENUE. 20%
EXP AVG
-------- --------
Recession begins at start of
Year........................... 19.14 15.69
18.80 14.33
18.47 12.71
17.97 11.27
</Table>
------------------------
* Assumed Case
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<Page>
DESCRIPTION OF THE INDENTURE AND THE NOTES
The following description is a summary of the material terms of the notes,
the indenture and other agreements. The description does not restate those
documents. Please read those documents because they, and not this description,
define your rights as holders of the notes. LIFT has filed those agreements as
exhibits to the registration statement of which this prospectus is a part. The
description relies on several defined terms, and this prospectus contains a
glossary in Appendix 1 that identifies the pages on which terms used in more
than one section of this prospectus are first defined or used.
THE INDENTURE AND THE TRUSTEE
The exchange notes will be issued under the trust indenture, dated as of
June 26, 2001, between LIFT, LIFT 1, Phoenix American Financial Services, Inc.,
in its capacity as the administrative agent, and Bankers Trust under which the
outstanding notes were issued. Bankers Trust is appointed the trustee under the
indenture. Bankers Trust is also the security trustee and the operating bank
under the security trust agreement, pursuant to which LIFT granted collateral to
the holders of the notes and its other creditors.
The notes are obligations solely of LIFT and are not secured by the
aircraft. The notes are not guaranteed by any lessee, Automatic LIFT I, LP,
General Electric Capital Corporation or other sellers of aircraft, GECAS, the
trustees and holders of the beneficial interest of LIFT or any other person.
Class A, Class B and Class C Notes are issuable in definitive, fully registered
form and in minimum denominations of $100,000 or any higher whole multiple of
$1,000. Class D Notes are issued in definitive, fully registered form and in
minimum denominations of $1,000,000 and higher whole multiples of $100,000.
The appointment of Bankers Trust as the trustee is currently for each class
and subclass of notes. Because the various classes of notes may not always have
the same interests, the trustee may resign or be replaced by the holders of any
class or subclass of notes as to any particular class or subclass of notes in
each case for that or any other reason. LIFT may also replace the trustee if the
trustee is no longer eligible, becomes subject to any insolvency proceeding or
otherwise is no longer able to act. No resignation or removal for replacement
may be effective until the replacement trustee has accepted its appointment. The
indenture provides that LIFT will pay the fees and expenses of the trustee and
will indemnify and defend the trustee against any loss or liability incurred by
the trustee other than through its own bad faith or negligence.
RATINGS
The exchange notes and the initial Class D Notes are rated as follows:
<Table>
<Caption>
RATING AGENCIES
--------------------------------
STANDARD &
CLASSES OF INITIAL NOTES FITCH MOODY'S POOR'S
------------------------ -------- -------- ----------
Class A-1................................................... AA Aa2 AA
Class A-2................................................... AA Aa2 AA
Class A-3................................................... AA Aaa AA
Class B-1................................................... A A2 A
Class B-2................................................... A A2 A
Class C-1................................................... BBB Baa2 BBB
Class C-2................................................... BBB Baa2 BBB
Class D-1................................................... BB Ba2 BB
Class D-2................................................... BB Ba2 BB
</Table>
103
<Page>
You should not view the ratings of the notes as a recommendation to buy,
sell or hold the notes. The ratings only address the likelihood of the timely
payment of interest at the rate specified below and the ultimate payment of
principal on the notes. The ratings do not address other payments on the notes
or the effect of any withholding tax on the notes or on the cash flows of LIFT
and its subsidiaries.
PAYMENTS ON THE NOTES
PAYMENT DATES
On each payment date, the trustee will pay-or will instruct a paying agent
appointed in Luxembourg to pay--to the holders of the notes all interest,
principal and any premium on the notes so long as the trustee or the paying
agent confirms that it has received the payment by 1:00 p.m., New York time, on
that payment date. If the trustee or the paying agent confirms receipt of the
payment after that time, it will make the payment to the holders of the notes on
the business day after the business day on which it received the payment. The
trustee or the paying agent will make each payment on each note on any payment
date other than the final payment date for that note to the holder of record as
of the record date immediately preceding that payment date. The final payment
for any note, however, will be made only upon surrender of the Note by the
holder or its agent--including any holder in street name--at the office or
agency of the trustee or the paying agent. So long as any notes are listed on
the Luxembourg Stock Exchange, LIFT must appoint and maintain a paying agent in
Luxembourg.
If any note is issued as a definitive note, payments on that note will be
made by check mailed to its holder of record on the applicable record date at
its address appearing on the register for that note. Alternatively, the holder
of one or more notes in definitive form that have an aggregate principal amount
of at least $1,000,000 may apply in writing to the trustee to have payments to
it made by wire transfer to a designated account at a financial institution in
New York City. The final payment, however, on those notes will be made only upon
surrender of those notes by the holder or its agent--including any holder in
street name--at the office or agency of the trustee or the paying agent.
EXPECTED MATURITIES
The following table sets forth the expected weighted average life, the
expected final payment date and the final maturity date of each class of the
exchange notes and the initial Class D Notes. The expected final payment date
for any note is the date on which the final payment of principal of and interest
on that note is expected to be made if all the assumptions described under "Note
Payment Assumptions" prove correct. The final maturity date for any note is the
date on which all principal not previously paid is due and payable. The actual
final payment date for each of the notes is likely to occur earlier or later
than that note's expected final payment date as a result of numerous factors, in
particular that those assumptions are unlikely to correspond to actual
experience. LIFT may also refinance or otherwise redeem notes before their
expected final payment dates.
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<Page>
WEIGHTED AVERAGE LIVES, EXPECTED FINAL
PAYMENT DATES AND FINAL MATURITY DATES OF THE INITIAL NOTES
<Table>
<Caption>
EXPECTED WEIGHTED EXPECTED FINAL FINAL
CLASS OF INITIAL NOTES AVERAGE LIFE IN YEARS PAYMENT DATE MATURITY DATE
---------------------- --------------------- --------------- -------------
Class A-1 Notes............................. 2.05 July 15, 2003 July 15, 2031
Class A-2 Notes............................. 3.05 July 15, 2004 July 15, 2031
Class A-3 Notes............................. 4.96 August 15, 2010 July 15, 2016
Class B-1 Notes............................. 10.20 May 15, 2018 July 15, 2031
Class B-2 Notes............................. 10.20 May 15, 2018 July 15, 2031
Class C-1 Notes............................. 10.60 May 15, 2018 July 15, 2031
Class C-2 Notes............................. 10.60 May 15, 2018 July 15, 2031
Class D-1 Notes............................. 10.60 May 15, 2018 July 15, 2031
Class D-2 Notes............................. 10.60 May 15, 2018 July 15, 2031
</Table>
SOURCES OF PAYMENT OF PRINCIPAL AND INTEREST
Payments on the notes will be made only after the expenses, with specified
exceptions, of LIFT and its subsidiaries have been paid and otherwise in the
order of the payment priorities described under "--Priority of Payments". The
sole sources of payment for the exchange notes, the Class D Notes and the other
obligations of LIFT and its subsidiaries are funds derived from rent and other
payments under existing leases and any future leases, insurance proceeds, sales
proceeds and any payments under the asset purchase agreement as to undelivered
aircraft, liquidity reserves funded out of the proceeds of the initial notes or
that may be funded out of the proceeds of future notes or provided through any
future credit facilities, lease reserves provided by lessees, net payments under
swap and other hedging agreements, investment earnings and net proceeds from the
sale of any notes issued to refinance other notes.
If there are insufficient funds on any payment date to pay interest on any
notes, LIFT may deposit all or part of the funds needed to pay interest on any
class or subclass of notes. Those deposits, if provided, may be made only out of
funds provided to LIFT by the holders of its beneficial interests. Those
deposits as to any class or subclass of notes are to be made into the note
account for that class or subclass of notes and are not subject to the payment
priorities described under "--Priority of Payments".
INTEREST
Each note will bear interest on its outstanding principal balance, payable
monthly in arrears on each payment date. Interest accrues for a period from and
including a payment date to but excluding the next payment date or, where
applicable, the final payment date for any note. The interest rate for the
exchange notes and the initial Class D Notes are as follows:
<Table>
Class A-1 Notes.......................................... LIBOR + 0.390%
Class A-2 Notes.......................................... LIBOR + 0.430%
Class A-3 Notes.......................................... LIBOR + 0.430%
Class B-1 Notes.......................................... LIBOR + 1.120%
Class B-2 Notes.......................................... 7.124%
Class C-1 Notes.......................................... LIBOR + 2.120%
Class C-2 Notes.......................................... 8.093%
Class D-1 Notes.......................................... LIBOR + 2.000%
Class D-2 Notes.......................................... 8.000%
</Table>
105
<Page>
Interest accrued at the respective rates referred to above and the
equivalent rates for any future notes and unpaid for any class of notes on any
payment date and interest at that rate on any unpaid interest for that class are
referred to as the "Interest Amount". The Interest Amount for any class of notes
has a higher payment priority than the other interest components on the notes,
namely, Maturity Step-Up Interest, Registration Step-Up Interest and Additional
Interest.
If LIFT does not pay any Class A-1 Note or Class A-2 Note on or before its
expected final payment date, that note will bear additional interest of 0.50%
per annum. This additional interest is referred to as "Maturity Step-Up
Interest". The initial notes provide and future notes may provide for an
increase in the rate of interest upon a failure by LIFT to satisfy any
registration requirements undertaken by it in issuing those notes. This increase
in interest is referred to as "Registration Step-Up Interest". Accrued interest
and premium on any class or subclass of notes that is not paid when due on any
payment date will bear interest at the then current interest rate for that class
or subclass of notes. Interest on past due interest at the regular rate for any
note is included in the Interest Amount and has the same payment priority as
regularly accruing interest. Any additional interest on past due interest and
interest on past due premium is referred to as "Additional Interest". Additional
Interest, Registration Step-Up Interest and Maturity Step-Up Interest will have
a lower payment priority, and the payment of those amounts is not and will not
be rated by the rating agencies rating the notes.
Interest on the Class A-1, Class A-2, Class A-3, Class B-1, Class C-1 and
Class D-1 Notes will be calculated on the basis of a 360-day year and the actual
number of days elapsed in the accrual period. Interest on the Class B-2,
Class C-2 and Class D-2 Notes will be calculated on the basis of a 360-day year
consisting of twelve 30-day months and, in the case of an incomplete accrual
period, the actual number of days elapsed in that interest accrual period.
The rate of interest payable on the Class A-1, Class A-2, Class A-3,
Class B-1, Class C-1 and Class D-1 Notes is based on LIBOR. LIFT and the
administrative agent will enter into an agreement with the Bankers Trust to act
as the reference agent and in that capacity to determine LIBOR. The reference
agent has agreed to determine LIBOR for a reference date that is two business
days before the start of each interest accrual period. On each reference date,
the reference agent is to determine LIBOR as the per annum offered rate for
deposits in U.S. dollars for a period of one month that appears on the display
designated as page "3750" on the Telerate Monitor or such other page or service
as may replace it for the purpose of displaying LIBOR of major banks for U.S.
dollar deposits at approximately 11:00 a.m., London time.
If that offered rate is replaced by the corresponding rates of more than one
bank, the reference agent is to determine LIBOR based on the average of the
rates that appear. If no offered rates appear or the Telerate page is
unavailable, the reference agent is to request each of the banks whose offered
rates normally appear or substitute reference banks in London to provide the
reference agent with its offered quotation to prime banks for dollar deposits in
London for the next accrual period at 11:00 a.m., London time, on the reference
date. LIBOR will be the average of the rates so quoted.
If the reference agent does not receive at least two quotations on a
reference date, the reference agent is to determine LIBOR for that reference
date based on the average of the U.S. dollar lending rates that New York City
banks selected by it are then quoting to leading European banks for the next
accrual period. If, again, the reference agent does not receive at least two
quotations, LIBOR as of that reference date is to be LIBOR for the last
preceding reference date. If the reference agent does not determine LIBOR for
any reason, the administrative agent has agreed to do so on the same basis.
Once the reference agent has determined LIBOR, the administrative agent is
to calculate the interest rate for each of the Class A-1, Class A-2, Class A-3,
Class B-1, Class C-1 and Class D-1 Notes the amount of interest payable on the
relevant payment date on each of those notes.
106
<Page>
The reference agent's determination of LIBOR and the administrative agent's
determination of the interest rate and the interest amount of each subclass of
notes will be conclusive and binding upon all parties, in the absence of
manifest error.
The administrative agent has agreed to give notice of the applicable LIBOR,
the payment date, the interest rate for each subclass of notes for each interest
accrual period and the amount of interest on each subclass of notes to LIFT, the
listing agent and paying agent in Luxembourg, the trustee, the rating agencies
rating the notes, the servicer, the financial advisor and the capital markets
advisor. Holders of the notes may obtain that information at the offices of the
Luxembourg listing and paying agents or from the reports provided to them by the
trustee for the relevant payment date.
The initial reference agent is Bankers Trust. LIFT is entitled to terminate
the appointment of the reference agent at any time on 30 days' notice and to
appoint a replacement reference agent in its place. Notice of any such
termination will be given to the holders of the notes that bear interest at a
floating rate. The reference agent may not be removed or resign unless a
successor has been appointed.
PRINCIPAL AMORTIZATION
On each payment date if there are sufficient funds available, LIFT will pay
the Minimum Principal Payment Amount for each class of notes and the Scheduled
Principal Payment Amount for each class of notes. Payments of principal in those
amounts will be made as to any class of notes only after the payment of all
amounts having a higher payment priority, as set forth under "--Priority of
Payments". If there are still available funds after payment of the above
principal installments and other amounts having a higher payment priority, the
excess funds will be paid to reduce principal of the notes in the alphabetical
order of classes. A reduction in principal from excess funds is not treated as a
redemption under the indenture and will not be paid with any premium.
The "Minimum Principal Payment Amount" for any class of notes on any payment
date is the difference, if positive, between the outstanding principal balance
of that class and the Minimum Target Principal Balance for that class.
The "Minimum Target Principal Balance" for any class of notes on any payment
date is determined by multiplying (1) the applicable "Minimum Class Percentage"
for that class of notes set forth in Appendix 5 to this prospectus times
(2) the Assumed Portfolio Value. If the outstanding principal balance of the
Class A Notes on any payment date is greater than the Adjusted Portfolio Value,
the Minimum Target Principal Balance of the Class A Notes will be the Scheduled
Target Principal Balance of the Class A Notes. The Minimum Class Percentages
will change as additional aircraft are acquired.
The "Assumed Portfolio Value" on any payment date is the total for all
aircraft in LIFT's portfolio on the fourth business day before the payment date
of the values obtained for each such aircraft by:
(1) dividing the Depreciation Factor for an aircraft on that fourth
business day by the Depreciation Factor for that aircraft on June 26, 2001 in
the case of any of the initial 39 aircraft or the date it was acquired in the
case of any additional aircraft and
(2) multiplying the result times the initial appraised base value of
that aircraft on June 26, 2001, or its acquisition date, as applicable.
The Assumed Portfolio Value for the initial 39 aircraft is set forth on
Appendix 4 to this prospectus.
The "Depreciation Factor" for an aircraft is:
(1-(k X n)) X (1 + g)(n/12)
107
<Page>
where:
n = the age of that aircraft expressed in months
k = ____________________0.9____________________
its expected useful life expressed
in months
g = 0.02
For purposes of the calculation of the Depreciation Factor, the expected useful
life of each of the initial 39 aircraft is deemed to be 30 years. The expected
useful life deemed to be applicable for any other aircraft will be determined by
LIFT.
The Depreciation Factor produces a "depreciation curve" that assumes that
the value of an aircraft will decline on an accelerated basis as the aircraft
ages. LIFT has used the Depreciation Factors solely to determine repayments of
principal of the notes and to calculate the amount to be paid for any initial
aircraft that is not timely delivered. They do not correlate to or predict
actual declines in aircraft values over any period. Furthermore, variables used
to calculate the Depreciation Factors will change as the composition of LIFT's
portfolio of aircraft changes through acquisitions and sales of aircraft.
Finally, LIFT may also apply different depreciation factors to express the
assumed decline in values of aircraft acquired in the future.
The "Adjusted Portfolio Value" on any payment date is the total for all
aircraft in LIFT's portfolio on the fourth business day before the payment date
of the values obtained for each such aircraft by:
(1) multiplying the Adjusted Base Value of an aircraft by its
Depreciation Factor on the calculation date and
(2) dividing the result by its Depreciation Factor as of the date of its
most recent appraisal.
The "Adjusted Base Value" of an Aircraft on the fourth business day before
any payment date is the average of the most recent base values appraisals
obtained for that aircraft.
The "Scheduled Principal Payment Amount" for any class of notes on any
payment date is the difference, if positive, between the outstanding principal
balance of that class as reduced by any Minimum Principal Payment Amount and the
Scheduled Target Principal Balance.
The "Scheduled Target Principal Balance" for:
(1) the Class A Notes on any payment date is determined by multiplying
(a) the applicable "Scheduled Class Percentage" for that class set forth in
Appendix 5 to this prospectus times (b) the lesser of the Assumed Portfolio
Value and 110% of the Adjusted Portfolio Value; and
(2) the Class B Notes, the Class C Notes and the Class D Notes is
determined by multiplying the (a) the applicable Scheduled Class Percentage set
forth in Appendix 5 to this prospectus times (b) the Assumed Portfolio Value.
The mathematical formulas described above are used to determine principal
payments on any payment date based on the net revenues collected during the
prior month. These formulas are designed to produce payments that would result
in each class of notes being repaid in full on its respective expected final
payment date if all the assumptions regarding the expected revenues and expected
expenses of LIFT described under "Note Payment Assumptions" prove to be correct.
Actual revenues will, however, vary from those assumed and may vary
significantly. In the case of revenue shortfalls, future revenues will be
allocated first to principal payments that have a higher payment priority until
that category of principal is reduced to its "expected" or "target" level for
the
108
<Page>
relevant payment date. The target level for each payment category on each
payment date is in turn determined as a percentage of a predetermined or assumed
value of the aircraft portfolio adjusted for depreciation. These percentages and
assumed value are shown in the indicated appendices to this prospectus.
In order to balance the effect of revenue variations, these formulas also
provide for more than one calculation for each class at different payment
priorities among subclasses of notes. The categories are designated as "Minimum"
and "Scheduled".
REFINANCING
LIFT may repay all or any part of any class of notes on any payment date
with the proceeds of notes issued under the indenture. The issuance of
refinancing notes must satisfy indenture covenants, must be authorized by the
controlling trustees of LIFT and will be effective only after receipt of a
confirmation of the rating agencies rating the notes that they will not lower,
qualify or withdraw their ratings as a result. The proceeds of the refinancing
notes may be used to pay the Redemption Price of the notes to be repaid, to pay
accrued and unpaid interest on those notes, to pay refinancing expenses and to
fund cash reserves. Any refinancing notes will have the same payment priority as
the notes of the class to which they belong and will not have a payment priority
higher than that of the Class A Notes.
The indenture treats the repayment of any notes with the proceeds of
refinancing notes as a redemption. As a result, the notice and other procedures
that apply to a redemption will apply to such a repayment. See "Redemption."
LIFT intends to refinance 100% of the outstanding principal balance of the
Class A-1 and Class A-2 Notes on their expected final payment date by selling
refinancing notes in the capital markets. Failure to repay any Class A-1 Notes
or Class A-2 Notes in full at its expected final payment date will not result in
an indenture event of default. If the Class A-1 Notes or Class A-2 Notes are not
repaid in full on their expected final payment date, that subclass of notes will
convert automatically into a subclass of notes that has a principal repayment
schedule intended to ensure that the remaining outstanding principal balance of
the Class A-1 and Class A-2 Notes will be repaid in full on or before its final
maturity date in accordance with the Class A-1 and Class A-2 Notes pool factors
set forth in Appendix 6 to this prospectus.
REDEMPTION
LIFT may, at its option, redeem all or any part of any class of notes on any
payment date. An optional redemption may be made with the proceeds of
refinancing notes or funds provided by the holders of the beneficial interest in
LIFT but not out of amounts required to be deposited in the collections account.
Within each subclass of notes being redeemed in part, the amount of the
principal being prepaid will be applied PRO RATA among all notes of that
subclass. An optional redemption does not include the payment of principal
faster than the expected schedule of installments out of amounts deposited in
the collections account.
REDEMPTIONS WITH A PREMIUM
Except in the case of an optional redemption for tax reasons or after the
acceleration of the notes, LIFT is required to pay a Redemption Price that
includes a premium to make an optional redemption of any notes, including in a
refinancing with refinancing notes. LIFT is in addition required to pay all
accrued and unpaid interest on the notes being redeemed to the date of
redemption.
109
<Page>
The "Redemption Price" is determined as follows:
(1) If LIFT redeems any initial Class A Notes, initial Class B-1 Notes,
initial Class C-1 Notes or initial Class D-1 Notes, the Redemption Price equals
the applicable Redemption Premium times the principal amount being redeemed.
(2) If LIFT redeems any initial Class B-2 Notes or initial Class C-2
Notes, the Redemption Price equals the greater of (x) the Projected Principal
Payment Amounts of those notes and the scheduled Interest Amount on those
amounts to and including May 15, 2018 discounted to present value at the
applicable Treasury Yield plus, in the case of the Class B-2 Notes, 0.75% and,
in the case of the Class C-2 Notes, 1.00%, plus the difference between the
principal amount of the notes being redeemed and the sum of the Projected
Principal Amounts of those notes and (y) the principal amount of the notes being
redeemed.
(3) If LIFT redeems any initial Class D-2 Notes before July 15, 2006,
the Redemption Price equals the higher of (a) the sum of (x) the Projected
Principal Payment Amounts of those notes and the scheduled Interest Amount on
those amounts to but not including July 15, 2006 plus the applicable Redemption
Premium times the sum of the Projected Principal Payment Amounts of those notes
falling due on or after July 15, 2006 discounted from July 15, 2006 to present
value at a discount rate of 0.75% plus the applicable treasury yield and
(y) the difference between the principal amount being redeemed and the sum of
those Projected Principal Payment Amounts and (b) the principal amount being
redeemed.
(4) If LIFT redeems any initial Class D-2 Notes on or after July 15,
2006, the Redemption Price equals the applicable Redemption Premium times the
principal amount being redeemed.
The Redemption Price for any future notes will be established as part of the
terms of those notes. If LIFT makes an optional redemption after the
acceleration of the notes, the Redemption Price equals the outstanding principal
balance of the notes without premium.
The Redemption Price is designed to reflect a premium on only that portion
of the principal being redeemed that is in excess of the principal payment
needed to reduce the principal balance of the relevant class of notes to the
level it should have if all expected installments are made. In the case of the
initial Class A, Class B-1, Class C-1 and Class D-1 Notes the premium on that
excess principal is determined by a declining percentage. In the case of the
Class B-2, Class C-2 Notes, or, if they are redeemed before July 15, 2006, the
Class D-2 Notes, the premium is determined by discounting the expected principal
payments that would remain had all prior expected payments been timely made and
interest on those payments to present value using a discount rate based on the
yield on applicable United States Treasury securities. If the Class D-2 Notes
are redeemed on or after July 15, 2006, the premium is determined by the same
approach as the approach applicable to the initial Class A, B-1, C-1 and D-1
Notes.
"Projected Principal Payment Amounts" means as of the relevant calculation
date the Applicable Percentage of the Assumed Principal Payments of the initial
Class B-2 Notes, Class C-2 Notes or Class D-2 Notes.
The "Applicable Percentage" is determined for any initial Class B-2 Notes,
Class C-2 Notes or Class D-2 Notes as of the relevant calculation date for the
Redemption Price by dividing (a) the excess, if any, of (x) the principal amount
of the notes being redeemed over (y) the excess, if any, of (i), if positive,
between the outstanding principal balance of those notes as reduced by any
principal payments that would have been made had there been no optional
redemption over (ii) the Assumed Principal Balance of those notes by (b) the
Assumed Principal Balance of those notes.
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<Page>
"Assumed Principal Balance" means as of the relevant calculation date the
sum of the Assumed Principal Payments.
"Assumed Principal Payments" means as of the relevant calculation date each
of the principal payment amounts for the initial Class B-2 Notes, Class C-2
Notes and Class D-2 Notes, set forth opposite a date in Appendix 8 to this
prospectus falling after the related payment date and ending on the expected
final payment date for those notes or any other specified date.
The "Redemption Premiums" of the initial Class A, Class B-1, Class C-1 and
Class D Notes are set out below:
<Table>
<Caption>
REDEMPTION PREMIUM
------------------------------------------------------------------------------
CLASS CLASS CLASS CLASS CLASS CLASS
REDEMPTION DATE A-1 A-2 A-3 B-1 C-1 D
--------------- -------- -------- -------- -------- -------- --------
After the Closing Date................... 101.00% 101.00% 101.50% 102.00% 103.00% 105.00%
On or after 7/15/2002.................... 100.50% 100.50% 101.00% 101.75% 102.50% 105.00%
On or after 7/15/2003.................... 100.00% 100.00% 100.75% 101.50% 102.00% 105.00%
On or after 7/15/2004.................... 100.00% 100.00% 100.50% 101.25% 101.75% 105.00%
On or after 7/15/2005.................... 100.00% 100.00% 100.25% 101.00% 101.50% 105.00%
On or after 7/15/2006.................... 100.00% 100.00% 100.00% 100.75% 101.25% 104.00%
On or after 7/15/2007.................... 100.00% 100.00% 100.00% 100.50% 101.00% 103.00%
On or after 7/15/2008.................... 100.00% 100.00% 100.00% 100.25% 100.50% 102.00%
On or after 7/15/2009.................... 100.00% 100.00% 100.00% 100.00% 100.25% 101.00%
On or after 7/15/2010.................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
</Table>
"Treasury Yield" means the interest rate, expressed as a semiannual decimal
and, in the case of United States Treasury bills, converted to a bond equivalent
yield, determined on the relevant calculation date 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 the relevant subclass of notes and trading
in the public securities markets either (1) 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 that subclass and (b) the other maturing as close as possible to, but
later than the Average Life Date of that subclass in each case as published in
the most recent H.15(519) statistical release published by the Board of
Governors of the Federal Reserve System or (2) if a weekly average yield to
maturity for United States Treasury securities maturing on the Average Life Date
of that subclass is reported in the most recent H.15(519) statistical release
published by the Board of Governors of the Federal Reserve System, that weekly
average yield to maturity.
For purposes of this definition,
"Average Life Date" is, for any class of notes, the date that follows the
applicable payment date by a period equal to the (1) the sum of the products of
(a) the Projected Principal Payment Amount allocable to that class of notes on
each subsequent payment date and (b) the number of days remaining until that
subsequent payment date divided by (2) the outstanding principal balance of that
class on that payment date.
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REDEMPTIONS WITHOUT PREMIUM
REDEMPTION FOR TAXATION PURPOSES. All payments of principal, interest and
premium made by LIFT on any note will be made without withholding or deduction
for or on account of any present or future taxes or duties of whatever nature
unless required by law. Should withholding or deduction be required by law, LIFT
is not obliged to pay any additional amounts in respect of withholding or
deduction.
If at any time:
(1) LIFT is or on the next payment date will be required to make any
withholding or deduction under applicable law with respect to any payment on any
notes; or
(2) LIFT is or will be subject to any circumstance that results or will
result in any tax or other similar imposition that would materially increase the
cost to LIFT of making payments on any notes or of complying with its
obligations as to the notes; materially increase the operating or administrative
expenses of LIFT; or otherwise obligate LIFT or any of its subsidiaries to make
any material payment on, or calculated by reference to, the amount of any sum
received or receivable by or on behalf of LIFT;
LIFT is to inform the trustee at that time of any such requirement or
imposition and to use its best efforts to avoid its effect. LIFT may not take
any action to avoid such an effect unless it first obtains a confirmation from
the rating agencies rating the notes that they will not lower, qualify or
withdraw their ratings as a result. If, after using its best efforts, LIFT has
not avoided the effects, LIFT may at its election redeem all of the notes of any
or all subclasses to which the withholding or deduction applies on any payment
date. In such an optional redemption, LIFT must pay the outstanding principal
balance of each subclass to be redeemed plus accrued and unpaid interest to the
redemption date but without premium. No optional redemption for tax reasons may
occur more than 30 days prior to the time at which the relevant imposition is to
become effective.
REDEMPTION AFTER ACCELERATION. If the notes are accelerated, LIFT may, at
its election, redeem the notes in full on the next payment date by written
notice to the trustee delivered not less than 30 days and no more than 45 days
prior to the next payment date. In such an optional redemption, LIFT must pay
the Redemption Price plus accrued and unpaid interest. The Redemption Price for
this purpose is the outstanding principal balance of the notes without premium.
METHOD OF REDEMPTION
The trustee is to give notice of any optional redemption at least 20 days
before the relevant redemption date to the holders of the notes of each affected
subclass. If a redemption is for less than all of the notes of any subclass,
notes of that subclass to be redeemed are to be repaid PRO RATA, to the extent
funds are available for that purpose. LIFT must deposit the funds necessary for
the redemption with the security trustee.
Each notice of redemption must state:
(1) the applicable redemption date;
(2) the trustee's arrangements for making payments;
(3) the Redemption Price of the notes to be redeemed;
(4) that, in the case of a redemption any subclass in whole, the notes
of that subclass must be surrendered by the holder or its authorized agent to
the trustee to collect payment; and
(5) that, in the case of a redemption in whole, interest on the notes
called for redemption will cease to accrue on and after the redemption date
unless LIFT defaults.
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Once a notice of a redemption in whole of a subclass of notes is published,
that subclass of notes will become due and payable on the redemption date stated
in that notice in the amounts stated above. All notes that are redeemed must be
surrendered to the trustee for cancellation and accordingly may not be reissued
or resold.
ADDITIONAL NOTES
LIFT may at any time issue additional notes under the indenture to provide
the funds to acquire additional aircraft and to fund cash reserves. Additional
notes may be issued as part of any outstanding subclass of notes or as a
separate subclass of any of the four classes of notes. Additional notes of any
subclass will have the same payment priority as other notes of the class to
which they belong. The priority of any subclass of notes as to other subclasses
of the same class will depend on the factors described under "--Allocation of
Principal among Subclasses of Notes".
Additional notes may be sold through one or more public offerings or private
placements of securities or otherwise. Additional notes may provide that they
will bear Maturity Step-Up Interest after their expected final payment date and
may establish any Redemption Price. Any issuance of additional notes and the
related acquisition of additional aircraft must satisfy indenture covenants,
must be authorized by the controlling trustees and will be effective only after
receipt of a confirmation from the rating agencies rating the notes that they
will not lower, qualify or withdraw their ratings as a result.
DEFEASANCE
LIFT may at any time terminate all of its obligations under the notes and
the indenture except for a limited number of continuing obligations. The
continuing obligations include those respecting the defeasance trust and
obligations to register the transfer or exchange of the notes, to replace
mutilated, destroyed, lost or stolen notes and to maintain a register for the
notes. If LIFT elects this option, called the legal defeasance option, the notes
may not be accelerated even if an indenture event of default occurs. Holders
will, instead, rely on the trust deposit referred to below for the payment of
interest when due and for the payment or principal upon maturity or, if LIFT has
also elected to redeem the notes, on the redemption date specified by it.
Alternatively, LIFT may elect to terminate only its obligations under the
covenants described under "--Indenture Covenants" and "--Operating Covenants".
If LIFT elects this option, called the covenant defeasance option, the notes may
be accelerated only if the indenture event of default arises under clauses (1),
(2) or (3) set forth under "--Indenture Events of Default" or under clause (5)
or (6) so set forth if applicable to LIFT but not if applicable only to a
subsidiary.
In case of the covenant defeasance option, holders will also rely on the
trust deposit referred to below for the payment of interest when due and for the
payment of principal upon maturity or, if LIFT has also elected to redeem the
notes, on the redemption date specified by it. In addition, if an indenture
event of default permitting acceleration does occur, the trust deposit would be
used to pay amounts then due on each accelerated subclass of notes.
In order to exercise either defeasance option, LIFT must irrevocably deposit
in trust cash or obligations of the U. S. Government or obligations of corporate
issuers that are rated the equivalent of AA+ or higher by the rating agencies
rating the notes and mature within 3 years of the date of defeasance. The
deposit must be in such amounts as will be sufficient to pay all principal or
Redemption Price and, accrued and unpaid interest on the notes to redemption or
maturity and must comply with specified other conditions. The other conditions
include delivering to the trustee an opinion of counsel to the effect that the
holders of the notes will not recognize income, gain or loss for United States
federal income tax purposes as a result of such deposit and defeasance and will
be subject to United States federal income tax on the same amount and in the
same manner and at the
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same times as would have been the case if such deposit and defeasance had not
occurred. In the case of the legal defeasance option only, that opinion of
counsel must be based on a ruling of the IRS or other change in applicable
United States federal income tax law.
PRIORITY OF PAYMENTS
PRIORITY BEFORE ACCELERATION OF THE NOTES
On each payment date, the administrative agent will distribute or retain all
amounts on deposit in the collections account in the order of priority set forth
below. Payments of principal as to any class of notes will be allocated among
the subclasses of that class as described under "--Allocation of Principal among
Subclasses of Notes". Any amount specified below will be paid only if all
amounts having a higher payment priority have been paid or retained in full.
(1) FIRST, to the expense account, an amount so that the amount on
deposit equals the Required Expense Amount;
(2) SECOND, the following amounts PRO RATA:
(a) to the holders of Class A Notes, the Interest Amount on the
Class A Notes, PRO RATA according to the Interest Amount due on the Class A
Notes; and
(b) to each swap provider, any payment due under a swap agreement
other than subordinated swap payments, PRO RATA according to the amounts due;
(3) THIRD, PRO RATA, to each provider of a senior eligible credit
facility, any amounts payable to it under the senior eligible credit facility
other than expenses and, to each cash collateral account that is a senior
eligible credit facility, an amount so that the amount on deposit equals the
required amount for that account;
(4) FOURTH, to retain in the collections account, cash reserves up to
the Senior Note Blockage Amount less aggregate amounts available for drawing
under any senior eligible credit facilities and on deposit in any cash
collateral account for the Class A Notes after giving effect to any transfer
under clause (3) above;
(5) FIFTH, to the holders of the Class A Notes, the Minimum Principal
Payment Amount for the Class A Notes;
(6) SIXTH, to the holders of Class B Notes, the Interest Amount on the
Class B Notes, PRO RATA according to the Interest Amount due on the Class B
Notes;
(7) SEVENTH, PRO RATA, to each provider of a mezzanine eligible credit
facility, any amounts payable to it under the mezzanine eligible credit facility
other than expenses, and, to each cash collateral account that is a mezzanine
eligible credit facility, an amount so that the amount on deposit equals the
required amount for that account;
(8) EIGHTH, to retain in the collections account, cash reserves up to
the Mezzanine Note Blockage Amount less the amounts available for drawing under
any senior or mezzanine eligible credit facilities and on deposit in any cash
collateral accounts for the Class A or Class B Notes after giving effect to any
transfers under clauses (3) and (7) above;
(9) NINTH, to the holders of the Class B Notes, the Minimum Principal
Payment Amount for the Class B Notes;
(10) TENTH, to the holders of Class C Notes, the Interest Amount on the
Class C Notes, PRO RATA according to the Interest Amount due on the Class C
Notes;
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(11) ELEVENTH, PRO RATA, to each provider of a junior eligible credit
facility, any amounts payable to it under the junior eligible credit facility
other than expenses and, to each cash collateral account that is a junior
eligible credit facility, an amount so that the amount on deposit equals the
required amount for that account;
(12) TWELFTH, to retain in the collections account, cash reserves up to
the Junior Note Blockage Amount less the amounts available for drawing under any
senior, mezzanine or junior eligible credit facilities and on deposit in any
cash collateral accounts for the Class A, Class B or Class C Notes after giving
effect to any transfers under clauses (3), (7) and (11) above;
(13) THIRTEENTH, to the holders of Class C Notes, the Minimum Principal
Payment Amount for the Class C Notes;
(14) FOURTEENTH, to the holders of the Class D Notes, the Interest
Amount on the Class D Notes PRO RATA according to the Interest Amount due on the
Class D Notes;
(15) FIFTEENTH, PRO RATA, to each provider of a subordinate eligible
credit facility, any amounts payable to it under the subordinate eligible credit
facility other than expenses and, to each cash collateral account that is a
subordinate eligible credit facility, an amount so that the amount on deposit is
equal to the required amount for that collateral account;
(16) SIXTEENTH, to retain in the collections account, cash reserves up
to the Subordinate Note Blockage Amount less the amounts available for drawing
under any eligible credit facilities on deposit in any cash collateral accounts
for the Class A, Class B, Class C or Class D Notes after giving effect to any
transfers under clauses (3), (7), (11) and (15) above;
(17) SEVENTEENTH, to the holders of Class D Notes, the Minimum Principal
Payment Amount for the Class D Notes;
(18) EIGHTEENTH, to the expense account, an accrual for expenses other
than aircraft modification payments and refinancing expenses that are
anticipated to become due between the next payment date and the fifth next
payment date in the amount the administrative agent reasonably determines should
be accrued;
(19) NINETEENTH, to the holders of notes, all accrued and unpaid
Maturity Step-Up Interest, Registration Step-up Interest and Additional Interest
in order of seniority by alphabetical designation among the classes of notes but
PRO RATA among the subclasses of each class according to the amount of that
interest due;
(20) TWENTIETH, to the holders of Class A Notes, the Scheduled Principal
Payment Amount for the Class A Notes;
(21) TWENTY-FIRST, to the holders of Class B Notes, the Scheduled
Principal Payment Amount for the Class B Notes;
(22) TWENTY-SECOND, to the holders of Class C Notes, the Scheduled
Principal Payment Amount for the Class C Notes;
(23) TWENTY-THIRD, to the holders of Class D Notes, the Scheduled
Principal Payment Amount for the Class D Notes;
(24) TWENTY-FOURTH, to the owner trustee account, the amount needed to
reimburse amounts provided to LIFT by its beneficial interest holders to cure
interest shortfalls for distribution by the owner trustee to the holders of the
beneficial interests of LIFT;
(25) TWENTY-FIFTH, to the expense account, an accrual for any aircraft
modification payments or refinancing expenses in the amount the administrative
agent determines to accrue;
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(26) TWENTY-SIXTH, to the holders of Class A Notes, the outstanding
principal balance of the Class A Notes;
(27) TWENTY-SEVENTH, to the holders of Class B Notes, the outstanding
principal balance of the Class B Notes;
(28) TWENTY-EIGHTH, to the holders of Class C Notes, the outstanding
principal balance of the Class C Notes;
(29) TWENTY-NINTH, to the holders of Class D Notes, the outstanding
principal balance of the Class D Notes;
(30) THIRTIETH, to swap providers, payments under swap agreements that
are subordinated by the relevant swap agreement;
(31) THIRTY-FIRST, to the servicer, payments related to additional
servicing obligations; and
(32) THIRTY-SECOND, to the owner trustee for distribution to the holders
of the beneficial interests of LIFT, all remaining amounts.
The payment priorities provide for cash reserves to be retained in the
collections account before payments having a lower payment priority may be made.
No transfer will be made following clause (4), (8), (12) or (16), respectively,
except to the extent cash reserves on deposit in the collections account exceed
the amounts to be retained as provided in such clauses. The reserves are
intended to provide a source of liquidity for the payment of interest, expense,
swap payments and other items in accordance with the priorities set forth above
that are not subordinated to the Interest Amount on the notes and for payments
on the notes that rank senior in priority to the payment priority clause under
which those cash reserves were retained. As of the date of this prospectus, the
total cash reserves were $83.0 million.
If the cash reserves reduce to below the Senior Note Blockage Amount, LIFT
may continue to pay the Required Expense Amount, swap payments that are not
subordinated to the Interest Amount on the notes and the Interest Amount on the
Class A Notes but may not make any payment that has a lower payment priority
until cash reserves are replenished to that amount. Likewise, if the cash
reserves reduce to below the Mezzanine Blockage Amount, the Junior Note Blockage
Amount or the Subordinated Note Blockage Amount, LIFT may continue to pay the
Interest Amount on the Class B Notes, the Class C Notes or the Class D Notes,
respectively, but may not make any payment that has a lower respective priority.
The required levels of cash reserves will automatically reduce as the
principal balance of the classes of the notes reduces below the target level set
forth in the indenture. The "Senior Note Blockage Amount" is initially
$33.0 million but will reduce to the outstanding principal balance of the
Class A Notes when that principal balance has reduced to $33.0 million or less.
The "Mezzanine Note Blockage Amount" is initially $53.0 million but will reduce
to the sum, when less than $53.0 million, of the Senior Note Blockage Amount and
the outstanding principal balance of the Class B Notes. The "Junior Note
Blockage Amount" is initially $72.0 million but will reduce to the sum, when
less than $72.0 million, of the Mezzanine Blockage Amount and the outstanding
principal balance of the Class C Notes. The "Subordinate Note Blockage Amount"
is initially $83.0 million but will reduce to the sum, when less than
$83.0 million, of the Junior Note Blockage Amount and the outstanding principal
balance of the Class D Notes. LIFT may also unilaterally reduce any reserve
level if it obtains a confirmation from the rating agencies rating the notes
that they will not lower, qualify or withdraw their ratings as a result. Cash
reserves in excess of the required levels will be applied in accordance with the
priorities of payments, and the determination of the outstanding principal
balance of any class of notes will be made so as to give effect to any funds
that may so be applied to the principal of that class of notes.
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LIFT may arrange for one or more credit facilities. These facilities may
consist of letters of credit, guarantees or other credit facilities that meet
criteria specified in the indenture or cash collateral accounts in the name of
the security trustee. Eligible credit facilities may be designated as senior,
mezzanine, junior or subordinate depending on the class of notes that they
support. Amounts available for drawing or on deposit in any eligible credit
facility will be credited against the related reserve levels indicated above.
Providers of eligible credit facilities will be reimbursed under the terms of
those facilities and cash collateral accounts will be replenished to a required
amount established by LIFT but in each case only within the respective payment
priorities set forth above. There are currently no cash collateral accounts or
other credit facilities.
"Required Expense Amount" means, the amount of expenses of LIFT and its
subsidiaries due and payable on the relevant calculation date or reasonably
anticipated to become due and payable before the payment date next succeeding
the following calculation date to the extent those expenses consist of expenses
other than aircraft modification payments and refinancing expenses or any
aircraft modification payments or refinancing expenses in respect of which an
accrual was previously made by a deposit in the expense account, whether or not
any such accrual has been previously used to pay any other expense, but
excluding any portion of the accrual previously used to pay any aircraft
modification payments or refinancing expenses. The Required Expense Amount is
determined after giving effect to any withdrawal from any lessee funded account
in which lessee segregated funds are kept or any drawing upon credit support
provided by a lessee that is then available for the payment of any expense.
ALLOCATION OF PRINCIPAL AMONG SUBCLASSES OF NOTES.
If the amount available on any payment date to pay principal to any class of
notes at any level of payment priority described in "--Priority of Payments" is
insufficient to pay all subclasses of that class of notes, the amount so payable
will be allocated to those subclasses in the following order of priority:
(1) To each subclass in order of issuance, the difference, if positive,
between (a) the outstanding principal balance of that subclass and (b) the
applicable extended pool factor set forth in Appendix 7 to this prospectus times
the initial principal balance of that subclass when it was issued. If two or
more subclasses were issued on the same date, principal amount will be applied
to each of those subclasses PRO RATA according to the amount so calculated.
(2) To each subclass, the difference, if positive, between (a) the
outstanding principal balance of that subclass as reduced by any payment under
clause (1) above and (b) the applicable pool factor set forth in Appendix 6 to
this prospectus times the initial principal balance of that subclass when it was
issued PRO RATA according to the amount so calculated.
(3) To each subclass that has an expected final payment date on or
before that payment date in order of issuance, the balance up to its outstanding
principal balance. If two or more subclasses were issued on the same date, the
balance will be applied in order of the earliest expected final payment date.
Likewise, if two or more subclasses have the same expected final payment date,
the balance will be applied PRO RATA according to the outstanding principal
balance of each of those subclasses as reduced by any payments under clauses
(1) and (2) above.
(4) To each subclass that has an excess amortization date on or before
that payment date, the balance up to its outstanding principal balance, PRO RATA
according to the outstanding principal balance of each of those subclasses as
reduced by any payments under the above clauses.
(5) To each subclass in order of the earliest expected final payment
date, the balance up to its outstanding principal balance. If two or more
subclasses have the same expected final payment date, the balance will be
applied PRO RATA according to the outstanding principal balance of each of those
subclasses as reduced by any payments under the above.
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The "excess amortization date" for each subclass of the initial notes is:
<Table>
<Caption>
CLASS OF INITIAL NOTES EXCESS AMORTIZATION DATE
---------------------- ------------------------
Class A-1.............................................. July 15, 2003
Class A-2.............................................. July 15, 2004
Class A-3.............................................. July 15, 2001
Class B-1.............................................. July 15, 2001
Class B-2.............................................. July 15, 2001
Class C-1.............................................. May 15, 2018
Class C-2.............................................. May 15, 2018
Class D-1.............................................. August 15, 2011
Class D-2.............................................. August 15, 2011
</Table>
PRIORITY OF PAYMENTS AFTER ACCELERATION
If the notes have been accelerated, the priorities described above under
"--Priority of Payments Before Acceleration" will not apply and all amounts will
instead be applied in the following order:
(1) FIRST, to the expense account, an amount so that the amount on
deposit equals the Required Expense Amount;
(2) SECOND, PRO RATA, to each provider of any senior eligible credit
facility, any amounts payable to it under the senior eligible credit facility
other than expenses;
(3) THIRD, PRO RATA
(a) to the holders of the Class A Notes, the Interest Amount on, and
all outstanding principal of, that class PRO RATA according to the amount of the
principal of that class and
(b) PRO RATA to any swap provider, any senior swap payments due
under any swap agreement;
(4) FOURTH, to the holders of the Class A Notes, all Maturity Step-up
Interest, Registration Step-up Interest, Additional Interest and redemption
premium, PRO RATA according to the amount due;
(5) FIFTH, PRO RATA, to each provider of a mezzanine eligible credit
facility, any amounts payable to it under the mezzanine eligible credit facility
other than expenses;
(6) SIXTH, to the holders of the Class B Notes, all accrued and unpaid
interest and redemption premium on, and all outstanding principal of, that
class, PRO RATA according to the amount due;
(7) SEVENTH, PRO RATA, to each provider of a junior eligible credit
facility, any amounts payable to it under the junior eligible credit facility
other than expenses;
(8) EIGHTH, to the holders of the Class C Notes, all accrued and unpaid
interest and redemption premium on, and all outstanding principal of, that
class, PRO RATA according to the amount due;
(9) NINTH, PRO RATA, to each provider of a subordinate eligible credit
facility, any amounts payable to it under the subordinate eligible credit
facility other than expenses;
(10) TENTH, to the holders of Class D Notes, all accrued and unpaid
interest and redemption premium on, and all outstanding principal of, that class
PRO RATA according to the amount due;
(11) ELEVENTH, PRO RATA, to any swap provider, the amounts of
subordinated swap payments due under any swap agreement; and
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(12) TWELFTH, to the owner trustee for distribution to holders of the
beneficial interests of LIFT, all remaining amounts.
INDENTURE COVENANTS
NO RELEASE OF OBLIGATIONS
LIFT has agreed that it will not take, or knowingly permit any subsidiary to
take, any action that would amend, terminate or discharge or prejudice the
validity or effectiveness of the indenture, the security trust agreement, the
asset purchase agreement, the administrative agency agreement, the financial
advisory agreement, the registration rights agreement, the servicing agreement
or the capital markets advisory agreement or permit any party to any of those
agreements to be released from its obligations, except, in each case, as
permitted or contemplated by the terms of the agreement.
LIFT may, however, terminate any of those agreements in connection with its
replacement with an agreement on terms substantially no less favorable to LIFT
and its subsidiaries than the agreement being terminated. The foregoing
restriction also does not apply if the controlling trustees of LIFT determine in
the resolution authorizing the action to be permitted or taken or the release to
be given that the action or release does not materially and adversely affect the
interests of the holders of the notes and LIFT has provided notice to the rating
agencies rating the notes. LIFT, however, may not in any case take any action
that would result in any amendment or modification to any conflicts standard or
duty of care in any of those agreements. In addition, there must be at all times
an administrative agent for the services now provided by the administrative
agent to LIFT and its subsidiaries, a financial advisor and a servicer for all
aircraft in LIFT's portfolio.
LIMITATION ON ENCUMBRANCES
LIFT has agreed that it will not, and will not permit any subsidiary to,
create, incur, assume or suffer to exist any mortgage, pledge, lien,
encumbrance, charge or security interest over or with respect to any asset of
LIFT or any subsidiary, including any ownership interests and any indebtedness
of any subsidiary held by LIFT or another subsidiary. This restriction does not
apply to funds of lessees required to be segregated from LIFT's other funds
under the terms of any lease. Encumbrances include any conditional sale, any
sale with recourse against the sellers or any affiliate of the sellers under the
asset purchase agreement and any agreement to give any security interest.
The foregoing provision does not preclude:
(1) any lien for taxes, assessments and governmental charges or levies
not yet due and payable or that are being contested in good faith by appropriate
proceedings;
(2) any liens of a repairer, carrier or hanger keeper on any aircraft
arising in the ordinary course of business by operation of law, any engine or
parts-pooling arrangements or any other similar lien;
(3) any lien or encumbrance on any aircraft, engines or parts permitted
under a lease of that property, other than liens or encumbrances created by the
lessor;
(4) any liens created by or through or arising from debt or liabilities
or any act or omission of any lessee in each case either in contravention of the
relevant lease, whether or not the lease has been terminated, or without the
consent of the relevant lessor; if the lessor becomes aware of such a lien, the
lessor must use commercially reasonable efforts to have the lien lifted;
(5) any head lease, lease, conditional sale agreement or purchase option
under the lease of an aircraft existing on June 26, 2001 with respect to the
initial 39 aircraft or on the date the aircraft is acquired by LIFT or any
subsidiaries with respect to any initial or future aircraft or any aircraft
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agreement meeting the requirements of clause (3) or (4) of the second paragraph
under "Limitation on Aircraft Sales";
(6) any lien for air navigation authority, airport landing, gate or
handling or similar charges or levies;
(7) any lien created in favor of LIFT, any subsidiaries or the security
trustee;
(8) any encumbrance arising under an eligible credit facility;
(9) any lien not referred to in clauses (1) through (8) above that would
not adversely affect the owner's rights and does not exceed the greater of 1% of
the aggregate initial appraised value of LIFT's portfolio of aircraft or
$250,000 per aircraft;
(10) any security interest created or required to be created under the
security trust agreement;
(11) any encumbrance over rights in or derived from any leases, if LIFT
obtains a confirmation from the rating agencies that they will not lower,
qualify or withdraw their ratings of the notes as a result and if the
transaction or series of transactions resulting in the encumbrance, taken as a
whole, does not materially and adversely affect the amount of collections that
would have been received by LIFT and its subsidiaries from the lease had the
encumbrance not been created;
(12) any transfer of title to or lease of an aircraft or other
encumbrance (A) to or in favor of a trust or an entity for the purpose of
registering the aircraft under the laws of an applicable jurisdiction so long
as, LIFT or its applicable subsidiary retains the beneficial or economic
ownership of the aircraft or (B) from a trust or entity to LIFT or a LIFT
subsidiary;
(13) any lien created in favor of the issuer of a surety bond, letter of
credit or similar instrument to be obtained by LIFT or any of its subsidiaries
in connection with the repossession or detention of any aircraft or other
enforcement action under a lease; or
(14) any other encumbrance the validity or applicability of which is
being contested in good faith in appropriate proceedings by LIFT or any
subsidiaries.
LIMITATION ON RESTRICTED PAYMENTS
LIFT has agreed that it will not, and will not permit any subsidiary to,
(1) declare or pay any dividend or make any distribution on its
ownership interests held by persons other than LIFT or any subsidiaries, except
that LIFT may make payments on its beneficial interests out of funds distributed
to the Owner Trustee as described under "Priority of Payments";
(2) purchase, redeem, retire or otherwise acquire for value any
beneficial interest in LIFT or any ownership interest of its subsidiaries held
by and on behalf of persons other than LIFT, any subsidiary or other persons
permitted under the requirements described in clause (2)(b) under "Limitation on
the Issuance, Delivery and Sale of Equity Interests";
(3) make any interest, principal or premium, if any, payment on the
notes or make any voluntary or optional repurchase, defeasance or other
acquisition or retirement for value of indebtedness of LIFT or any subsidiary
that is not owed to LIFT or any subsidiary other than in accordance with the
notes and the indenture, except out of funds other than collections, if any new
notes of LIFT issued in connection with that action rank PARI PASSU with the
notes being repurchased, defeased, acquired or retired, the controlling trustees
determine that the action does not materially and adversely affect the holders
of the notes and the rating agencies rating the notes confirm that they will not
lower, qualify or withdraw their ratings on the notes as a result; or
(4) make any investments, other than investments of funds in the
accounts permitted under the indenture, investments permitted under provision
described under "--Limitation on Engaging in
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Business Activities", and investments in any subsidiary that owns aircraft, if
written notice of the organization or acquisition of the subsidiary is given to
each rating agency rating the notes.
For purposes of the above provision, the term "investment" means any loan or
advance to a person or entity, any purchase or other acquisition of any
beneficial interest, capital stock, warrants, rights, options, obligations or
other securities of a person or entity, any capital contribution to a person or
entity or any other investment in a person or entity. The term "investment" does
not include any obligation to make deferred or installment payments pursuant to
any agreement for the purchase of aircraft in clause (3) or (5) of the second
paragraph under "--Limitation on Aircraft Sales" if LIFT or a subsidiary retains
a security interest in the relevant aircraft until all of those obligations are
discharged.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
LIFT has agreed that it will not, and will not permit any subsidiary to,
create or otherwise suffer to exist any consensual encumbrance or restriction of
any kind on the ability of any subsidiary to:
(1) declare or pay dividends or make any other distributions permitted
by applicable law or purchase, redeem or otherwise acquire for value any
beneficial interest or other ownership interests of LIFT or any subsidiary;
(2) pay any indebtedness owed to LIFT or a subsidiary;
(3) make loans or advances to LIFT or a subsidiary; or
(4) transfer any of its property or assets to LIFT or any other
subsidiary.
The foregoing provision does not restrict any consensual encumbrances or other
restrictions:
(1) existing on June 26, 2001 with respect to the initial 39 aircraft or
on the date an aircraft is acquired with respect to any aircraft under the
transactional documents described in this prospectus and any amendments,
extensions, refinancings, renewals or replacements of those documents, if the
consensual encumbrances and restrictions in any amendment, extension,
refinancing, renewal or replacement are no less favorable in any material
respect to the holders of the notes than those previously in effect; or
(2) in the case of clause (4) in the prior paragraph, (a) that restrict
in a customary manner the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract or similar property or
asset or (b) that exist by virtue of any transfer of, agreement to transfer,
option or right with respect to, or consensual encumbrance on, any property or
assets of LIFT or any subsidiary not otherwise prohibited by the indenture.
This provision also does not restrict LIFT or any subsidiary from creating,
incurring, assuming or suffering to exist any encumbrances not otherwise
prohibited under the indenture.
LIMITATION ON ENGAGING IN BUSINESS ACTIVITIES
LIFT has agreed that it will not, and will not permit any subsidiary to,
engage in any business or activity other than:
(1) (a) purchasing or otherwise acquiring, owning, holding, converting,
maintaining, modifying, managing, operating, leasing or re-leasing aircraft
within the limitations described under "--Limitation on Aircraft Acquisitions";
(b) selling or otherwise disposing of aircraft within the limitations
described under "--Limitation on Aircraft Sales";
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(c) entering into all contracts and engaging in all related activities
incidental to those activities, including from time to time in the ordinary
course of business accepting, exchanging, selling or holding promissory notes,
contingent payment obligations or equity interests of lessees or their
affiliates issued in connection with the bankruptcy, reorganization or other
similar process of those lessees or affiliates or in settlement of delinquent
obligations or obligations anticipated to be delinquent of those lessees or
affiliates;
(2) providing loans to, and guaranteeing or otherwise supporting the
obligations and liabilities of, LIFT or any subsidiary, in each case on such
terms and in such manner as the controlling trustees of LIFT see fit, whether or
not LIFT or the subsidiary derives a benefit from doing so, if the loan,
guarantee or other support is provided in connection with the purposes set forth
in clause (1) above and LIFT gives written notice of the loan, guarantee or
other support to each rating agency rating the notes;
(3) financing or refinancing the business activities described in
clause (1) above through the offer, sale and issuance of any securities of LIFT,
upon such terms and conditions as the controlling trustees see fit, for cash or
in payment or in partial payment for any property purchased or otherwise
acquired by LIFT or any subsidiary;
(4) engaging in currency and interest rate exchange transactions for the
purposes of avoiding, reducing, minimizing, hedging against or otherwise
managing the risk of any loss, cost, expense or liability arising, or that may
arise, directly or indirectly, from any change or changes in any interest rate
or currency exchange rate or in the price or value of LIFT's or any of its
subsidiaries' property or assets, within limits and with providers specified in
a resolution of the controlling trustees and submitted to the rating agencies
rating the notes, including but not limited to dealings, whether involving
purchases, sales or otherwise, in foreign currency, spot and forward interest
rate exchange contracts, forward interest rate agreements, caps, floors and
collars, futures, options, swaps, and any other currency, interest rate and
other similar hedging arrangements and such other instruments as are similar to,
or derivatives of, any of the foregoing;
(5) (a) establishing, promoting and aiding in promoting, constituting,
forming or organizing companies, trusts, syndicates, partnerships or other
entities of all kinds in any part of the world for the purposes set forth in
clause (1) above if LIFT gives written notice to each rating agency rating the
notes that the entity is set up in compliance with the indenture;
(b) acquiring, holding and disposing of shares, securities and other
interests in any such trust, company, syndicate, partnership or other entity;
and
(c) disposing of shares, securities and other interests in, or causing
the dissolution of, any existing subsidiary within the requirements described
under "--Limitation on Aircraft Sales";
(6) taking out, acquiring, surrendering and assigning policies of
insurance and assurances with any insurance company or companies as LIFT or any
of its subsidiaries may think fit and to pay the related premiums; and
(7) entering into any net lease of one or more aircraft between LIFT or
any subsidiary of LIFT, acting as the lessor, and a special purpose entity,
acting as lessee, under an agreement containing terms required by the indenture
and requiring the lessee to comply with all covenants of the indenture relating
to the operation of the aircraft if:
(a) LIFT obtains a confirmation from the rating agencies rating the
notes that they will not lower, qualify or withdraw their ratings as a result;
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(b) all costs and expenses of LIFT in connection with the net lease
are paid in full by the beneficial interest holders of LIFT;
(c) any associated redemption of the Class D Notes is effected in
accordance with the terms of the indenture; and
(d) any associated redemption of the Class D Notes does not
materially and adversely affect the holders of the notes.
LIMITATION ON INDEBTEDNESS
LIFT has agreed that it will not, and will not permit any subsidiary to,
incur, create, issue, assume, guarantee or otherwise become liable for or with
respect to, or become responsible for, the payment of, indebtedness,
contingently or otherwise and whether present or future. For ease, the term
"incur" is used for each such action.
The term "indebtedness" means, at any date of determination and without
duplication,
(1) all indebtedness of a person for borrowed money;
(2) all obligations of a person evidenced by bonds, debentures, notes or
other similar instruments;
(3) all reimbursements and other obligations of a person in respect of
letters of credit or other similar instruments;
(4) all obligations of a person to pay the deferred and unpaid purchase
price of property or services due more than six months after the date of
purchasing the property or service or taking delivery and title to the property
or the completion of the services and payment deferrals arranged primarily as a
method of financing the acquisition of the property or service;
(5) all obligations of a person under a lease of, or other agreement
conveying the right to use, any property that is required to be classified and
accounted for as a capital lease obligation under generally accepted accounting
principles in the United States;
(6) all indebtedness of other persons secured by a lien on any asset of
a person, whether or not such indebtedness is assumed by that person; and
(7) all indebtedness of other persons guaranteed by a person.
The foregoing provision does not restrict:
(1) indebtedness in respect of any initial note;
(2) indebtedness in respect of any refinancing notes or other
indebtedness issued in connection with the repurchase, defeasance, acquisition
or retirement for value of any initial notes, if
(a) LIFT receives a confirmation from the rating agencies rating the
notes that they will not lower, qualify or withdraw their ratings as a result
with respect to the refinancing notes or other indebtedness;
(b) taking into account the refinancing or repurchase, LIFT receives
a confirmation from the rating agencies rating the notes that they will not
lower, qualify or withdraw their ratings as a result; and
(c) the net proceeds of the refinancing notes or other indebtedness
are applied only (x) to repay the Redemption Price of the notes being refinanced
or repurchased and related transaction expenses, (y) to fund any cash collateral
account established for the refinancing notes and (z) for deposit into the
collections account as cash reserves at any existing or increased level;
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(3) indebtedness in respect of guarantees by any of LIFT or its
subsidiaries (other than as provided in clause (5) below) unless it would
materially and adversely affect the holders of the notes;
(4) indebtedness in respect of any additional notes, if
(a) the net proceeds of the additional notes are applied (w) to
finance the acquisition of additional aircraft where permitted as described
under "Limitation on Aircraft Acquisitions", (x) to pay related transaction
expenses, (y) to fund any cash collateral account established for those
additional notes and (z) for deposit into the collections account as cash
reserves at any existing or increased level;
(b) LIFT obtains a confirmation from the rating agencies rating the
notes that they will not lower, qualify or withdraw their ratings as a result;
and
(c) the additional notes and all other secured obligations will be
secured by the collateral under the security trust agreement;
(5) obligations to each seller of aircraft under each agreement for the
purchase of aircraft, any related lease assignment and assumption agreements and
obligations to lessees and others under related documents, including any
indebtedness owed to any lessee with respect to maintenance contribution
obligations, redelivery condition adjustment payments or any other obligation of
LIFT or its subsidiaries to a lessee;
(6) indebtedness under intercompany loans or any agreement between LIFT
or any of its subsidiaries if the indebtedness is evidenced by promissory notes
and LIFT provides written notice of the indebtedness to each rating agency
rating the notes;
(7) indebtedness of LIFT under any eligible credit facility if LIFT
obtains a confirmation from the rating agencies rating the notes that they will
not lower, qualify or withdraw their ratings as a result;
(8) indebtedness required in connection with repossession of any
aircraft or engine;
(9) indebtedness in favor of the issuer of a surety bond, letter of
credit or similar instrument to be obtained by LIFT or any of its subsidiaries
in connection with the repossession or detention of any aircraft or other
enforcement action under a lease; and
(10) indebtedness in connection with any net lease of one or more
aircraft permitted by clause (7) under "--Limitation on Engaging in Business
Activities".
For the purposes of this provision, the term "guarantee" means any
contingent or other obligation of a person directly or indirectly guaranteeing
any indebtedness or other obligation of any other person. Without limiting the
generality of that definition, the term "guarantee" includes any contingent or
other obligation of a person directly or indirectly to purchase or pay, or
advance or supply funds for the purchase or payment of, the indebtedness or
other obligation of another person or entered into for the purpose of assuring
in any other manner the person owed the indebtedness or other obligation of its
payment or protecting that person against loss in respect to the whole or any
part of the indebtedness or other obligation. The term "guarantee" does not
include endorsements for collection or deposit in the ordinary course of
business. The term "guarantee" when used as a verb has a corresponding meaning.
LIMITATION ON AIRCRAFT SALES
LIFT has agreed that it will not, and will not permit any subsidiary to,
sell, transfer or otherwise dispose of any aircraft or any interest in any
aircraft other than as provided in the servicing agreement.
The foregoing provision does not restrict the sale, transfer or other
disposition of:
(1) any engine or part of any aircraft purchased on the date that
aircraft is acquired;
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(2) one or more aircraft or interest in one or more aircraft:
(a) pursuant to a purchase option or a similar agreement existing on
June 26, 2001 with respect to the initial 39 aircraft or on the date the
aircraft was acquired in the case of any substitute or additional aircraft; or
(b) to LIFT or another subsidiary if LIFT provides written notice to
each rating agency rating the notes;
(3) if the sale does not result in default under the concentration
limits exercised under "--Concentration Limits" and the net present value of the
cash net sale proceeds is not less than the Note Target Price;
(4) in connection with the receipt of insurance proceeds due to an event
of loss;
(5) when the net present value of the cash Net Sales Proceeds is less
than the Note Target Price if
(a) in any one calendar year sales under this clause do not exceed
10% of the Adjusted Portfolio Value as determined by the most recent appraisals
for that year;
(b) the controlling trustees unanimously confirm that the sale would
not materially and adversely affect the holders of the notes; and
(c) unless LIFT obtains a confirmation from the rating agencies
rating the notes that they will not lower, qualify or withdraw their ratings as
a result, the sale does not result in a default under the concentration limits
described under "Concentration Limits";
(6) in connection with any net lease permitted by clause (7) under
"Limitation on Engaging in Business Activities"; or
(7) transfer of title or another interest in an aircraft (A) to or in
favor of a trust or an entity for the purposes of registering the aircraft under
the laws of an applicable jurisdiction where LIFT or its applicable subsidiary
retains the beneficial or economic ownership of the aircraft or (B) from a trust
or entity to LIFT or a LIFT subsidiary.
For the purposes of this provision, the net present value of the cash net
sale proceeds is the present value of all payments received or to be received by
LIFT or any of its subsidiaries from the date on which the relevant option is
granted or the relevant aircraft purchase agreement is executed through and
including the date on which title to the aircraft is transferred discounted back
to the option granting or execution date, as the case may be, at the weighted
average cost of funds of LIFT. The weighted average cost of funds will be based
on the cost of funds represented by the notes taking into account any swap
agreements.
"Note Target Price" means an amount equal to 103% of the aggregate
outstanding principal balance of the notes plus any accrued but unpaid interest
on the principal and any related swap breakage costs, allocable to an aircraft
on the date the sale agreement is executed or the option granted. On any date,
the outstanding principal balance of the notes allocable to an aircraft is
determined by multiplying the principal balance by the Adjusted Base Value of
that aircraft on the most recent payment date and dividing the result by the
Adjusted Portfolio Value on that payment date.
"Net Sales Proceeds" means the aggregate amount of cash received or to be
received from time to time, whether as initial or deferred consideration, by or
on behalf of the seller in connection with the sale, transfer or other
disposition of an asset after deducting without duplication reasonable and
customary brokerage commissions, fees under the servicing agreement and other
similar fees and commissions and the amount of taxes payable in connection with
or as a result of the transaction, in
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each case to the extent, but only to the extent, that the amounts deducted are,
at the time of receipt of the cash, actually paid to a person that is not an
affiliate of the seller and are properly attributable to the transaction or to
the asset.
LIMITATION ON AIRCRAFT ACQUISITIONS
LIFT has agreed that it will not, and will not permit any subsidiary to,
purchase or otherwise acquire any aircraft other than the initial 39 aircraft.
LIFT and its subsidiaries may, however, purchase or otherwise acquire,
directly or indirectly, additional aircraft from time to time if
(a) no indenture event of default has occurred and is continuing;
(b) the acquisition does not result in a default under the concentration
limit described under "Concentration Limits"; and
(c) after giving effect to the acquisition, no more than 90% of the
appraised base value of the aircraft in LIFT's portfolio consists of Stage 3
narrowbody aircraft, no more than 60% of the appraised base value of that
portfolio consists of Stage 3 widebody aircraft, no more than 15% of the
appraised base value of that portfolio consists of regional jets and none of the
aircraft in the portfolio are turboprop aircraft unless LIFT obtains a
confirmation from the rating agencies rating the notes that they will not lower,
qualify or withdraw their ratings as a result.
LIMITATION ON MODIFICATION PAYMENTS AND CAPITAL EXPENDITURES
LIFT has agreed that it will not, and will not permit any subsidiary to,
make any capital expenditures for the purpose of effecting any optional
improvement or modification of any aircraft, including the optional conversion
of any aircraft from a passenger aircraft to a freighter or mixed-use aircraft
or the purchase or other acquisition of any engines or parts outside of the
ordinary course of business. An aircraft modification payment does not include
any capital expenditure made in the ordinary course of business in connection
with a new lease of an aircraft or any capital expenditure requirements existing
in any lease on June 26, 2001 for the initial 39 aircraft or the date on which
it was acquired in the case of any other aircraft.
LIFT and its subsidiaries may, however, make an aircraft modification
payment if
(1) that and all other modification payments made after June 26, 2001
with respect to any single aircraft do not exceed the amount of funds that would
be necessary to perform one incident of heavy maintenance on the aircraft;
(2) the modification payment is included in the annual operating budget
of LIFT and its subsidiaries and approved by the controlling trustees or the
amount of funds necessary to make that modification payment has been accrued in
the expense account or otherwise allowed to be paid under the provision
described under "--Limitation on Indebtedness"; and
(3) that and all other modification payments do not exceed 5% of the
aggregate initial appraised value of all aircraft.
LIMITATION ON CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
LIFT has agreed that it will not, and will not permit any subsidiary to,
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of its property and assets as an entirety or substantially as
an entirety, in one transaction or in a series of related transactions to any
other person, or permit any other person to merge with or into LIFT or any
subsidiary, unless
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(1)(a) the resulting entity is a special purpose entity, with a charter
that is substantially similar to that of LIFT or the subsidiary;
(b) payments from the resulting entity to the holders of the notes do
not give rise to any withholding tax payments less favorable to them than the
amount of any withholding tax payments that would have been required had the
event not occurred; and
(c) the entity is not subject to taxation as a corporation, an
association or publicly traded partnership taxable as a corporation;
(2) in the case of LIFT, the current beneficial interests remain
outstanding or are exchanged for new interests that have substantially the same
terms and conditions and the resulting entity expressly assumes all of the
obligations of LIFT in the indenture, the notes and each other transaction
document described in this prospectus;
(3) a confirmation is obtained from the rating agencies rating the notes
that they will not lower, qualify or withdraw their ratings as a result;
(4) immediately after giving effect to the transaction, no indenture
event of default occurs and is continuing;
(5) the transaction does not result in the recognition of gain or loss
by the holders of the beneficial interest of LIFT for United States federal
income tax purposes; and
(6) LIFT delivers to the trustee an officer's certificate and an opinion
of counsel, each stating that the consolidation, merger or transfer and any
related supplemental indenture comply with the above criteria and, if
applicable, the requirements described under "--Limitation on Aircraft Sales"
and that all applicable conditions precedent under the indenture relating to
such transaction have been satisfied.
The foregoing provision does not apply to a consolidation, merger, sale,
conveyance, transfer, lease or disposition:
(a) within LIFT and its subsidiaries if it would not materially and
adversely affect the holders of the notes and LIFT gives written notice to each
rating agency rating the notes;
(b) complying with the terms of the requirements described under
"--Limitation on Aircraft Sales"; or
(c) effected as part of a single transaction providing for the
redemption or defeasance of the notes in accordance with their terms.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
LIFT has agreed that it will not, and will not permit any subsidiary to,
directly or indirectly, enter into, renew or extend any transaction with any
affiliate of LIFT or any subsidiary, except upon fair and reasonable terms no
less favorable to LIFT or the subsidiary than could be obtained in a comparable
arm's-length transaction with a person that is not an affiliate. Without
limiting the foregoing, this provision applies to the purchase, sale, lease or
exchange of property or assets, or the rendering of any service.
The foregoing limitation does not limit or apply to
(1) any transaction in connection with the establishment of LIFT and its
subsidiaries or its acquisition of the initial 39 aircraft or made under the
transactional documents described in this prospectus;
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(2) any transaction among LIFT and its subsidiaries unless it would
materially and adversely affect the holders of the notes;
(3) the payment of reasonable and customary fees to, and the provision
of reasonable and customary liability insurance in respect of, the controlling
trustees;
(4) any payments on or with respect to the notes or to the owner trustee
under the indenture and to the holders of the beneficial interests of LIFT under
its trust agreement;
(5) the acquisition of additional aircraft or any transaction complying
with the provisions described under "--Limitation on Aircraft Sales";
(6) any payments of the types referred to in clause (1) or (2) of the
provision described under "Limitation on Restricted Payments" and not prohibited
under those clauses; or
(7) the sale of LIFT or any subsidiary as part of a single transaction
providing for the redemption or defeasance of notes in accordance with their
terms.
LIMITATION ON THE ISSUANCE, DELIVERY AND SALE OF EQUITY INTERESTS
LIFT has agreed that it will not:
(1) issue, deliver or sell any shares, interests, participations or
other equivalents in equity however designated and whether voting or non-voting,
other than beneficial interests existing on June 26, 2001; or
(2) sell or permit any subsidiary, directly or indirectly, to issue,
deliver or sell, any shares, interests, participations or other equivalents in
equity however designated and whether voting or nonvoting, other than the
beneficial interests and shares existing on June 26, 2001.
The foregoing provision does not apply to:
(a) issuances, sales, delivery, transfer or pledge of beneficial
interests in any LIFT group member to or for the benefit of any other LIFT group
member;
(b) issuances or sales of any additional beneficial interest of LIFT to
finance the acquisition of additional aircraft as permitted by the indenture if
the rating agencies rating the notes confirm that they will not lower, qualify
or withdraw their ratings as a result and the net proceeds are used only to
finance such an aircraft acquisition, to fund any cash collateral account, for
deposit as cash reserves in the collections account or to pay any related
transaction expenses;
(c) issuances or sales of interests of foreign subsidiaries of LIFT to
nationals in their jurisdiction of incorporation or organization to the extent
required by applicable law or necessary in the determination of the controlling
trustees to avoid adverse tax consequences or to facilitate the registration or
leasing of aircraft;
(d) the pledge of interests in subsidiaries under the security trust
agreement;
(e) the sale of any interests of a subsidiary of LIFT to effect the sale
of all aircraft owned by the subsidiary in compliance with the terms of the
requirements described under "--Limitation on Aircraft Sales"; and
(f) the issuance of additional beneficial interests in LIFT to the
holders of its current beneficial interest to the extent those holders provide
funds to LIFT to effect a redemption, to fund payments to be made to cure
interest shortfalls or to discharge the notes upon their acceleration.
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BANKRUPTCY AND INSOLVENCY
LIFT has agreed that:
(1) it will promptly provide the trustee and the rating agencies rating
the notes with written notice of any proceeding by or against LIFT or any of its
subsidiaries seeking to adjudicate any of them bankrupt or insolvent, seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar
official for either all or any substantial part of its property;
(2) it will not take any action to waive, repeal, amend, vary,
supplement or otherwise modify its charter documents that would adversely affect
the rights, privileges or preferences of any holders of the notes, as determined
by the controlling trustees; and
(3) it will not, without an affirmative unanimous written resolution of
the controlling trustees, take any action to waive, repeal, amend, vary,
supplement or otherwise modify the provision of its trust agreement that
requires a unanimous resolution of the controlling trustees or limits the
actions of its beneficial interest holders with respect to voluntary insolvency
proceedings or consents to involuntary insolvency proceedings.
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
LIFT has agreed that it will duly and punctually pay the principal, premium
and interest on the notes in accordance with the terms of the indenture and the
notes.
LIMITATION ON EMPLOYEES
LIFT has agreed that it will not, and will not permit any of its
subsidiaries to, employ or maintain any employees other than as required by law.
The trustees and directors of LIFT or any of its subsidiaries are not deemed to
be employees for this purpose.
OPERATING COVENANTS
CONCENTRATION LIMITS
LIFT has agreed that it will not, and will not permit any subsidiary to
lease or re-lease any aircraft if doing so would violate the concentration
limits listed below unless the rating agencies rating the notes confirm that
they will not lower, qualify or withdraw their ratings on the notes as a result.
LIFT and its subsidiaries may, however, renew or extend any lease to an existing
lessee even if that would result in a violation of the concentration limits. The
concentration limits may be changed in the future but only if the rating
agencies rating the notes confirm that they will not lower, qualify or withdraw
their ratings on the notes as a result.
<Table>
<Caption>
PERCENTAGE OF MOST RECENT
APPRAISED VALUE OF
LESSEE CONCENTRATION LIMITS PORTFOLIO(1)
--------------------------- -------------------------
Single lessee rated the equivalent of BBB/Baa2 or
better............................................. 15
Other single lessees................................. 12
Five largest lessees................................. 40(2)
</Table>
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<Table>
<Caption>
PERCENTAGE OF MOST RECENT
APPRAISED VALUE OF
COUNTRY CONCENTRATION LIMITS PORTFOLIO(1)
---------------------------- -------------------------
Countries rated the equivalent of AAA/Aaa(3)........ 30
Countries rated the equivalent of BBB/Baa2 or
better(3)......................................... 20
Other............................................... 15
</Table>
<Table>
<Caption>
PERCENTAGE OF MOST RECENT
APPRAISED VALUE OF
REGION CONCENTRATION LIMITS PORTFOLIO(1)
--------------------------- -------------------------
Developed Market region(4)........................... 60
Emerging Market region(4)............................ 30
Asia and Pacific regions together(4)................. 45
Undesignated(4)...................................... 20(5)
</Table>
------------------------
(1) This percentage is obtained by dividing the most recent appraised value of
all aircraft leased or to be leased to lessees habitually based in the
applicable country by the most recent appraised value of all aircraft then owned
by LIFT and its subsidiaries.
(2) On and after June 26, 2006, the initial Lessee Concentration Limit of 40% of
the aggregate appraised value of the aircraft applicable to the five largest
lessees will reduce to 35%, unless the rating agencies rating the notes confirm
to LIFT that they will not lower, qualify or withdraw their ratings as a result
of retaining the 40% limit.
(3) The applicable rating is the sovereign foreign currency debt rating assigned
by the rating agencies rating the notes to the country in which a lessee is
habitually based at the time the relevant lease is executed.
(4) The designation of regions is set out below.
(5) In addition, no more than 10% of the most recent appraised value of the
aircraft may be leased to lessees habitually based in "Undesignated" countries
rated below the equivalent of BBB/Baa2 and no more than 5% of the most recent
appraised value of the aircraft may be leased to lessees habitually based in
"Undesignated" countries in Africa.
<Table>
<Caption>
REGION COUNTRY
------ --------------------------------------------------------
Developed Markets
Europe.................................. EU*, Norway and Switzerland
North America........................... Canada and United States
Pacific................................. Australia, Hong Kong, Japan, New Zealand and Singapore
Emerging Markets
Asia.................................... China, India, Indonesia, Korea, Malaysia, Pakistan,
Philippines, Sri Lanka, Taiwan and Thailand
Europe and Middle East.................. Czech Republic, Greece,** Hungary, Israel, Jordan,
Poland, Russia and Turkey
Latin America........................... Argentina, Brazil, Chile, Columbia, Mexico, Peru and
Venezuela
Undesignated.............................. All other countries, which are generally those with
small or undeveloped capital markets
</Table>
------------------------
* Except Greece and Luxembourg
** If Greece is admitted to the Euro zone, then Greece will be included as a
member of the Europe Developed Market Region.
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In addition, the indenture does not permit LIFT or any of its subsidiaries
to lease or re-lease aircraft to lessees who operate or intend to operate those
aircraft in specified countries listed in the indenture and in other countries
listed in the indenture without procuring airline repossession insurance. The
list of prohibited countries and countries with respect to which airline
repossession insurance must be procured may be modified from time to time upon
the approval of the rating agencies rating the notes.
The indenture contains no limitations on the countries or regions where
sub-lessees may habitually base aircraft if the sublease is permitted under the
relevant lease and the relevant lessee is a signatory to a lease.
COMPLIANCE WITH LAW; MAINTENANCE OF PERMITS
LIFT has agreed that it and its subsidiaries will (1) comply with applicable
laws, (2) with limited exceptions, obtain all material governmental
registrations, certificates, licenses, permits and authorizations required to
use and operate the aircraft they own, (3) not cause or knowingly permit any
lessee to operate any aircraft under any lease in any material respect contrary
to any applicable law and (4) with limited exceptions, not knowingly permit any
lessee not to obtain all material governmental registrations, certificates,
licenses, permits and authorizations required for the lessee's use and operation
of its leased aircraft.
The foregoing provision will not be deemed to have been breached by virtue
of acts or omissions of a lessee, sub-lessee or any person who has possession of
the aircraft or any engine for the purpose of repairs, maintenance, modification
or storage or by virtue of any requisition, seizure, or confiscation of the
aircraft if neither LIFT nor any subsidiary consents to those acts or omissions
and LIFT or any subsidiary that is the lessor or owner of the aircraft promptly
and diligently takes such commercially reasonable actions as a leading
international aircraft operating lessor would take under similar circumstances.
APPRAISAL OF AIRCRAFT
LIFT has agreed to deliver, commencing in 2002, to the trustee appraisals of
the base value of each of the aircraft at least once each year by July 1. The
appraisals must come from at least three independent appraisers that are members
of the International Society of Transport Aircraft Trading or any similar
organization and be dated within 30 days prior to their delivery to the trustee.
MAINTENANCE OF AIRCRAFT
LIFT has agreed that it and its subsidiaries will maintain each leased
aircraft and engine in a condition consistent with the reasonable commercial
practice of leading international aircraft operating lessors with respect to
similar aircraft leased under similar circumstances. LIFT also has agreed to
maintain each aircraft that is not subject to a lease in a condition consistent
with the reasonable commercial practice of leading international aircraft
operating lessors with respect to similar aircraft not under lease.
The foregoing provision will not be deemed to have been breached by virtue
of acts or omissions of a lessee, sub-lessee or any person who has possession of
the aircraft or any engine for the purpose of repairs, maintenance, modification
or storage, or by virtue of any requisition, seizure, or confiscation of the
aircraft if neither LIFT nor any subsidiary consents to those acts or omissions
and LIFT or any subsidiary that is the lessor or owner of the aircraft promptly
and diligently takes such commercially reasonable actions as a leading
international aircraft operating lessor would take under similar circumstances.
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NOTIFICATION OF THE TRUSTEE AND THE ADMINISTRATIVE AGENT
LIFT has agreed to notify the trustee and the administrative agent as soon
as LIFT or any subsidiary becomes aware of any loss, theft, damage or
destruction to any aircraft or engine if the potential cost of repair or
replacement exceeds $2,000,000.
LEASES
The indenture requires LIFT in general to use the pro forma lease agreements
then in use by the servicer as a starting point in the negotiation of future
leases other than intracompany leases. These pro forma leases may be revised
especially for use by LIFT and its subsidiaries. In connection with any renewal
or extension of a lease, LIFT may use the pre-existing lease as a starting point
in the lease negotiations. LIFT may also use a pre-existing lease as a starting
point in negotiations in connection with the leasing of any aircraft that is
managed or serviced by the servicer.
If in their annual review of the pro forma lease the controlling trustees
determine that any revision to the pro forma lease made since their last review
is substantially inconsistent with the core lease provisions listed in the
indenture and materially and adversely affects the holders of the notes, the
indenture requires the controlling trustees to direct the servicer not to
include that revision in the pro forma lease to be used as the starting point in
the negotiation of future leases. If the controlling trustees determine that the
revision to the pro forma lease will not materially and adversely affect the
holders of the notes, the controlling trustees must amend the applicable core
lease provisions and notify the rating agencies rating the notes of any lease
entered into in the future whose terms are materially less favorable from the
point of view of the lessor than that of any lease then in effect.
Neither LIFT nor any subsidiary may enter into any future lease if the
rental payments are denominated in a currency other than United States dollars
unless the rating agencies rating the notes confirm that they will not lower,
qualify or withdraw their ratings on the notes as a result.
The indenture requires that each lease of an aircraft owned by LIFT or a
subsidiary, other than an intracompany lease, contain an indemnity from the
lessee in respect of any losses or liabilities arising from the use or operation
of the aircraft during the term of the lease. The indemnity may be subject to
exceptions, limitations and qualifications that are consistent with the
reasonable commercial practices of leading international aircraft operating
lessors.
OPINIONS
The indenture prohibits LIFT and its subsidiaries from entering into any
future lease, other than an intracompany lease, or changing the jurisdiction of
registration of any aircraft that is subject to a lease, unless the servicer or
an additional servicer obtains legal opinions regarding compliance with the
registration requirements of the relevant jurisdiction, enforceability of the
future lease and certain other matters that would customarily be obtained by
leading international aircraft operating lessors.
INSURANCE
LIFT has agreed that it or its subsidiaries will maintain (1) airline hull
insurance for each aircraft in an amount at least equal to the Note Target Price
for that aircraft, (2) airline liability insurance for each aircraft and
occurrence in an amount at least equal to the relevant amounts stated in the
indenture for each model of aircraft, as those amounts may be changed in the
future with the approval of the rating agencies rating the notes and
(3) airline repossession insurance for each aircraft subject to a lease and
habitually based in specified jurisdictions in underdeveloped markets, in an
amount at least equal to the Note Target Price for that aircraft. LIFT has
agreed that, for the period August 25, 2001 to June 26, 2002, it will, if
requested by any rating agency rating the notes, obtain aircraft repossession
insurance for aircraft leased to lessees habitually based in specified countries
in underdeveloped
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markets. That period may be extended for up to one year if a rating agency so
requests. Any insurance for any aircraft subject to a lease may be subject to
commercially reasonable deductible and self-insurance arrangements. The coverage
and terms of any insurance maintained for any aircraft not subject to a lease
must be consistent with the commercial practices of leading international
aircraft operating lessors regarding similar aircraft.
In determining the amount of insurance required to be maintained, LIFT may
take into account any indemnification from, or insurance provided by, any
governmental, supranational or inter-governmental authority or agency the
sovereign foreign currency debt of which is rated at least AA, or the
equivalent, by at least one of the rating agencies rating the notes. Any such
indemnification or insurance must provide substantially similar protection as
the insurance required by this covenant. LIFT is not required to maintain any
insurance to the extent that such insurance is not generally available in the
relevant insurance market at commercially reasonable rates.
COMPLIANCE THROUGH AGENTS
LIFT is entitled to delegate the performance of any of its operating
obligations under the indenture to one or more service providers if the document
under which the delegation is made is included as collateral under the security
trust agreement. This provision is not intended to relieve LIFT from any
liability if LIFT or any service provider fails to perform any obligation
strictly in accordance with the indenture.
INDENTURE EVENTS OF DEFAULT AND REMEDIES
Each of the following events is an "indenture event of default" with respect
to any subclass of notes:
(1) A failure to pay when due the Interest Amount on any subclass of
notes that continues for a period of five or more business days.
(2) A failure to pay when due principal on any subclass of notes either
on or prior to its final maturity date.
(3) A failure to pay when due any amount, other than interest, on any
subclass of notes if there are amounts available in the collections account or
any cash collateral account on a payment date to pay that amount and the failure
continues for five or more business days after that payment date.
(4) A failure by LIFT to comply with any of the provisions of the
indenture or any notes, other than a payment default under clause (1), (2) or
(3) above, if the failure materially and adversely affects the holders of that
subclass of notes and continues for a period of 30 days or more after written
notice to LIFT by the controlling party or by holders of at least 25% of the
outstanding principal balance of the senior-most class.
If the failure can be cured within 90 days of the date of that notice
and the administrative agent has promptly provided the trustee with a
certificate stating that LIFT has commenced, or will promptly commence, and
diligently pursue all reasonable efforts to cure the failure, the 30-day period
may be extended so long as LIFT or any subsidiary is diligently pursuing the
cure but no longer than 90 days.
(5) The entry by a court of a decree or order that remains unstayed and
undismissed for 90 days for:
(a) relief in respect of LIFT or any subsidiary that owns or leases
aircraft with a base value of at least 10% of the Adjusted Portfolio Value at
that time under any applicable law relating to bankruptcy, insolvency,
reorganization or other similar law;
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(b) appointment of a receiver, trustee or similar official of LIFT
or any such subsidiary; or
(c) the winding up or liquidation of the affairs of LIFT or such
subsidiary.
(6) LIFT or any such subsidiary:
(a) commences a voluntary case under any applicable law relating to
bankruptcy, insolvency, reorganization or other similar law or consents to the
entry of an order for relief in any involuntary case under any such law;
(b) consents to the appointment of or taking possession by a
receiver, liquidator, trustee or similar official for LIFT or any such
subsidiary or for all or substantially all of the property and assets of LIFT or
any such subsidiary; or
(c) effects any general assignment for the benefit of creditors.
(7) A judgment or order for the payment of money in excess of 5% of the
aggregate Adjusted Portfolio Value is rendered against LIFT or any subsidiary
and either:
(a) enforcement proceedings are commenced on the judgment or order;
or
(b) no stay of enforcement of the judgment or order is in effect for
10 consecutive days. A judgment or order will not be an indenture event of
default so long as (x) the amount of the judgment or order is covered by a
binding policy of insurance and (y) the insurer, who must be rated at least "A"
by A.M. Best Company or similar successor entity, has been notified of, and has
not disputed the claim for, the amount of the judgment or order.
(8) The constitutional documents of LIFT cease to be in full force and
effect and are not replaced with documents that have the same terms.
The indenture provides that, within 30 days of an indenture event of default
as to any subclass of notes, the trustee will mail to LIFT and to the holders of
notes of that subclass notice of all existing defaults under the indenture known
to it. Other than a default as to the payment of interest, principal or premium,
the trustee may withhold the notice if it determines in good faith that
withholding the notice is in the interest of the affected holders.
If an indenture event of default, other than an indenture event of default
under clause (5) or (6) above, occurs and is continuing, the controlling party
may give a default notice to LIFT, the administrative agent, the security
trustee and the trustee declaring the outstanding principal balance of the notes
and all accrued and unpaid interest to be due and payable. The "controlling
party" is either the senior trustee or, in some instances, the provider of a
senior eligible credit facility. If the controlling party is the senior trustee,
the holders of at least 25% of the outstanding principal balance of the
senior-most class of notes may instruct the controlling party in writing to give
a default notice. If the controlling party is the facility provider, only it may
give a default notice.
At any time after the controlling party has sent a default notice and before
the exercise of any other remedies, the controlling party may annul the
declaration and its consequences by written notice to LIFT, the senior trustee,
the administrative agent, the security trustee and the trustee if:
(1) LIFT deposits an amount sufficient to pay all overdue installments
of interest, the principal and premium on the notes that would have become due
other than by acceleration;
(2) the annulment would not conflict with any judgment or decree; and
(3) all other defaults other than nonpayment of amounts that become due
solely because of acceleration have been cured or waived.
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If the controlling party is the senior trustee, the holders of at least 25% of
the outstanding principal balance of the senior-most class of notes may direct
the controlling party to give that notice of annulment.
If the controlling party is a credit facility provider, only it may give a
notice of annulment. If an indenture event of default under clause (5) or
(6) occurs, all principal, interest and premium will automatically become due
without any further action by any party.
The "senior trustee" is
(1) so long as any Class A Notes are outstanding, the representative of
the majority holders of the Class A Notes;
(2) after the Class A Notes have been repaid in full, and so long as any
Class B Notes are outstanding, the representative of the majority holders of the
Class B Notes;
(3) after the Class A Notes and Class B Notes have been repaid in full
and so long as any Class C Notes are outstanding, the representative of the
majority holders of the Class C Notes; and
(4) after the Class A Notes, the Class B Notes and the Class C Notes
have been repaid in full and so long as any Class D Notes are outstanding, the
representative of the majority holders of the Class D Notes.
If at any time each subclass of the senior-most class of notes does not have the
same trustee, then the senior trustee will be the trustee of the subclass with
the lowest numerical designation. As of the date of this prospectus, the senior
trustee for each class of notes is Bankers Trust.
The indenture will entitle the trustee, subject to its duty during a default
to act with the required standard of care, to be indemnified by the holders of
any class of notes before exercising any right or power under the indenture at
the request or direction of those holders. Except in limited circumstances, no
holder has the right to sue for recovery or take any other actions to enforce
the obligations of LIFT to pay any and all amounts due and payable under the
notes other than through the senior trustee acting in accordance with the
indenture. No holder of the notes has the right to take any steps to cause the
filing for bankruptcy of LIFT or any subsidiary.
Upon acceleration, the security trustee may exercise such remedies as to the
collateral under the security trust agreement as are provided by the Uniform
Commercial Code and other applicable law. These remedies include the sale of all
or any part of the collateral at public or private sale for cash, credit or
other terms as the security trustee may determine to be commercially reasonable.
SUBORDINATION
Under the terms of the indenture and the security trust agreement, each
holder of a Note agrees that its claims against LIFT for payment of any amount
are subordinate to any claims that have a higher payment priority as described
above in "--Priority of Payments" and "--Allocation of Principal among
Subclasses." This subordination continues until the holder of a prior claim, or
the trustee on its behalf, has received the full cash amount of the prior claim.
Each holder is also obligated to hold for the benefit of the holder of a prior
claim any amounts received by the holder that should have been paid to or on
behalf of the holder of a prior claim. Each holder also agrees to execute and
deliver such instruments and documents, and take all further action, that the
controlling party may reasonably request in order to effectuate the above. Funds
provided by the holders of beneficial interests in LIFT to cure interest
shortfalls amounts in any cash collateral account, funds provided for a
defeasance of the notes and for an optional redemption of the notes and proceeds
of refinancing notes are not subject to these subordination provisions.
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Under the security trust agreement, so long as any prior claims remain
unpaid, neither any trustee or representative of any holders of notes whose
claims are not prior nor the holders of these claims themselves may commence or
join in commencing any enforcement, collection, foreclosure or other proceeding
as to the collateral. Upon request by the controlling party, however, the
holders of the junior claims and their representatives must, at the expense of
LIFT, join in enforcement, collection, foreclosure or other proceedings and
otherwise cooperate in the proceedings with the security trustee. They must also
execute all such consents, pleadings, releases and other instruments as the
security trustee may reasonably request. The conduct of the proceedings are at
all times to be under the exclusive control of the security trustee.
Furthermore, upon request by the controlling party, the representatives of
the holders of the junior claims are required to release the security in their
favor in any collateral and execute all such instruments as the controlling
party may reasonably request upon any sale, lease, transfer or other disposition
of any collateral under the security trust agreement. Neither the holders of the
junior claims nor their representatives may contest the validity, perfection or
priority of, or seek to avoid, the rights of the controlling party or the
holders of the prior claims as to any collateral.
MODIFICATION AND WAIVER
The indenture provides that, with the consent of the holders of a majority
of the outstanding principal balance of the notes voting as a single class,
LIFT, when authorized by a controlling trustee's resolution, may amend or modify
the notes or the indenture. Without the consent of each provider of an eligible
credit facility, no amendment may modify the provisions of the indenture
relating to that credit facility or, to the extent affecting its credit facility
or credit facilities generally.
Except as provided in the indenture in connection with the issuance of
additional notes or except as described under "--Allocation of Principal among
Subclasses", no amendment may without the consent of each swap provider of an
eligible credit facility and the holder of each note affected by the amendment:
(1) alter the frequency or the currency of payment of, the maturity of, or the
method of calculation of the amount of any interest, principal and premium on
any subclass of notes, (2) reduce the percentage of the outstanding principal
balance of any subclass required to approve any amendment or waiver or
(3) alter the manner or priority of payment of any subclass of notes.
The holders of a majority of the outstanding principal balance of the
senior-most class by notice to the senior trustee may waive some indenture
events of default. Any modification approved by the required holders of any
subclass of notes will be binding on the holders of that subclass of notes and
each party to the indenture. LIFT is not restricted from amending any lease if
the amendment is otherwise permitted by the indenture.
The subordination provisions contained in the indenture may not be amended
or modified without the consent of each swap provider, each provider of an
eligible credit facility, each holder of the subclass of notes affected by the
amendment or modification and each holder of any subclass of notes that has a
payment priority higher than that of those notes. The provisions in the
indenture relating to the priority of expenses, swap payments or any eligible
credit facilities may in no event be amended or modified.
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NOTICES TO HOLDERS
Except as provided below, any notice to the holders of notes is valid if
given:
(1) by publication in the LUXEMBURGER WORT or, if that newspaper is no
longer published or timely publication is not practicable, in such English
language newspaper or newspapers with a general circulation in Europe as the
trustee approves;
(2) by either of the information in the notice appearing on the relevant
page of the Reuters screen or such other medium for the electronic display of
data as may be approved by the trustee and notified to holders or publication in
the FINANCIAL TIMES and the National Edition of THE WALL STREET JOURNAL or, if
either newspaper is no longer published or timely publication is not
practicable, in such English language newspaper or newspapers with a general
circulation in Europe and the United States as the trustee approves; and
(3) until such time as definitive notes are issued and, so long as the
notes are registered in the name of a nominee for DTC, Euroclear or Clearstream,
Luxembourg, and so long as the notes are listed on the Luxembourg Stock Exchange
and its rules so permit, delivery of the relevant notice to DTC, Euroclear and
Clearstream, Luxembourg, as applicable, for communication by them to the
holders.
Any notice to the holders of any subclass of notes bearing interest based on
a floating rate that specifies an interest rate for those notes, any payment
date, any principal payment or any payment of premium is validly given by
delivery to DTC, Euroclear and Clearstream, Luxembourg, as applicable, for
communication by them to the holders, does not need to be published in the
LUXEMBURGER WORT, and must be promptly given to Kredietbank S.A. Luxembourg and
made available at the office of the Luxembourg paying agent. Any notice
specifying an increase in the interest rate of any subclass of notes due to
Maturity Step-Up Interest or Registration Step-Up Interest or redemption of
principal of any notes must be published in the LUXEMBURGER WORT or another
daily newspaper of general circulation in Luxembourg. Any notice is deemed to
have been given on the first day on which any of those conditions shall have
been met.
Notices to holders of the Class D Notes generally will be made by the
trustee directly to the holders.
The trustee may approve some other method of giving notice to the
Noteholders if, in its opinion, the other method is reasonable in light of the
number and identity of the holders and prevailing market practice, is in the
best interests of the holders and will comply with the rules of the Luxembourg
Stock Exchange, as confirmed by Kredietbank S.A. Luxembourg or any other stock
exchange on which the notes may be listed. The trustee must give notice of its
approval of another method of notice.
ACCOUNTS
The administrative agent, acting on behalf of the security trustee, has
directed the operating bank under the security trust agreement to establish and
maintain on the operating bank's books and records in the name of the security
trustee the following accounts:
(1) the "collections account",
(2) one or more "rental accounts",
(3) one or more "lessee funded accounts" in which cash security deposits
and segregated funds are held in accordance with the requirements of a lease,
(4) the "expense account",
(5) one note account for each subclass of the initial notes, and
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(6) an owner trustee's account.
When required under the indenture or by action of the controlling trustees,
the administrative agent is to direct the operating bank to maintain in the name
of the security trustee
(1) the "aircraft purchase account",
(2) the "defeasance/redemption account",
(3) the "refinancing account", and
(4) any cash collateral accounts.
Each of the foregoing accounts has been or will be established and
maintained initially with Bankers Trust. The administrative agent has agreed to
replace Bankers Trust as the operating bank if Bankers Trust fails to maintain
either a long-term unsecured debt rating of A or better by Moody's or a
short-term unsecured debt rating of A-1+ by Standard & Poor's, P-1 by Moody's
and if rated by Fitch, F1. The security trustee and the trustee have appointed
the administrative agent as their agent to direct withdrawal and transfer from
the accounts. Neither the security trustee nor the trustee are responsible for
the acts or omissions of the administrative agent.
Funds on deposit in the accounts will be invested and reinvested by the
administrative agent on behalf of the security trustee in one or more
investments permitted under the indenture. The controlling trustees of LIFT may
direct these investments unless the notes are accelerated. Investment earnings,
net of losses and investment expenses will be deposited in the collections
account. The investment of funds in any lessee funded account must be made in a
manner and with maturities that conform, and the use of earnings must also
conform, to the requirements of the related leases.
RENTAL ACCOUNTS
LIFT is to direct all of the lessees to make all payments under the leases
directly into the applicable rental accounts. The administrative agent is to
transfer all funds deposited into the rental accounts into the collections
account within one business day of receipt. Limited amounts may need to be left
on deposit for local legal or regulatory reasons.
NON-TRUSTEE ACCOUNTS
If the administrative agent determines that, for any tax or other regulatory
or legal reason, any payments under any leases may not be deposited into an
account in the name of the security trustee, LIFT may establish one or more
non-trustee accounts for such amounts in its own name. Any non-trustee account
must be subject to the direction and control of the administrative agent on
behalf of the security trustee.
COLLECTIONS ACCOUNT
All collections received by LIFT and its subsidiaries must be deposited in
the collections account and either be transferred to another Account or retained
in the collections account. "Collections" include all amounts received by LIFT
and its subsidiaries, including-
(1) rental payments transferred from the rental accounts;
(2) payments under any letter of credit, letter of comfort, letter of
guarantee or other assurance in respect of a lessee's obligations under a lease;
(3) cash reserves in the collections account;
(4) amounts received as damages or for any breach of contract for nonpayment
of any of the foregoing;
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(5) proceeds of any aircraft sale or amounts received under any agreement
for the purchase of aircraft;
(6) proceeds of any insurance payments for any aircraft;
(7) amounts transferred from a lessee funded account to the collections
account;
(8) net payments to LIFT under any swap agreement;
(9) investment income from the accounts;
(10) any proceeds or other payments received under the purchase agreement
with General Electric Capital Corporation or any amounts transferred from the
aircraft purchase account; and
(11) any other amounts received by any member of LIFT and its subsidiaries.
Collections do not include funds required to be segregated by leases, funds
to be applied in connection with a redemption or defeasance, funds received in
connection with a refinancing of notes and other amounts required to be paid
over to any third party pursuant to any contract.
LESSEE FUNDED ACCOUNT
Lessee security deposits and payments for maintenance reserves may be
required to be segregated from other LIFT funds. These amounts will be held in a
lessee funded account. Funds on deposit in any lessee funded account will be
used to pay for maintenance and to repay security deposits or to make such other
payments as may be required or permitted under the terms of the relevant leases.
They also may be applied against maintenance payments otherwise required to be
made by the lessee during the term of the related lease. These amounts may not
be used to make payments on the notes at any time, including after a default,
except to the extent applied to unpaid rents and other amounts due from the
lessee. If a lessee relinquishes its rights to receive these amounts at the end
of a lease, any surplus funds may be moved from the lessee funded account to the
collections account.
EXPENSE ACCOUNT
On each payment date, the administrative agent is to withdraw the funds from
the collections account, in the priority of payments established for the notes,
to replenish the expense account to the required expense amount. On any payment
date or any other day, the administrative agent may withdraw funds from the
expense account to pay expenses then due. Aircraft modification payments and
refinancing costs may be withdrawn only to the extent sufficient accruals were
made for those purposes. If funds in the expense account are insufficient to pay
all expenses due on any day other than a payment date, the administrative agent
may withdraw funds from the collections account to avoid a default by LIFT in
its obligations to any third party.
REFINANCING ACCOUNT
Upon receipt of a notice of a refinancing, the trustee must direct the
administrative agent to cause the operating bank to establish a refinancing
account for the benefit of the holders of the subclass of notes to be
refinanced. The administrative agent will deposit into the refinancing account
all net proceeds of any such refinancing after application of accruals made for
that purpose in the expense account. Those amounts will be held in the
refinancing account until the principal, interest and premium on the refinanced
notes are paid and the refinanced notes are canceled.
DEFEASANCE/REDEMPTION ACCOUNT
Upon receipt of a notice that any subclass of notes is to be redeemed or
defeased other than in a refinancing, the trustee must direct the administrative
agent to cause the operating bank to establish
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and maintain a defeasance/redemption account. All amounts received for the
purpose of any such redemption or defeasance are to be deposited in the
defeasance/redemption account.
AIRCRAFT PURCHASE ACCOUNT
The proceeds of any additional notes after making any other required
deposits must be deposited in the aircraft purchase account and held in that
account until applied for the purchase of additional aircraft.
NOTE ACCOUNT
Upon the issuance of notes of any subclass for which a note account was not
previously established, the trustee must direct the administrative agent to
cause the operating bank to establish and maintain a note account for that
subclass of notes. All amounts transferred to a note account for any subclass of
notes in accordance with the "--Priority of Payments" above are to be applied to
the payment of that subclass of notes.
OWNER TRUSTEE ACCOUNT
All amounts transferred to the owner trustee account as described under
"--Priority of Payments" are to be paid to the owner trustee account for further
application by the owner trustee in accordance with the trust agreement of LIFT.
THE COLLATERAL
LIFT, its subsidiaries and the security trustee have entered into the
security trust agreement dated as of June 26, 2001. Under the security trust
agreement, LIFT and its subsidiaries have granted to the security trustee, for
its benefit and the benefit of the holders of the notes, persons providing
services to LIFT, such as GE Capital Aviation Services, Limited, the trustee,
the administrative agent and others, swap providers and providers of eligible
credit facilities and in order to secure the payment and performance of all of
their obligations, a security interest in all of their right, title and interest
in the collateral. The "Collateral" includes, but is not limited to, the
following:
(1) all of the outstanding shares of common stock of subsidiaries and
indebtedness of subsidiaries, all additional shares of stock acquired by LIFT
and each of its subsidiaries and additional indebtedness owed to LIFT and each
of its subsidiaries and all property received, receivable or otherwise
distributable in respect to or in exchange for any stock or indebtedness;
(2) all of the beneficial interests in subsidiaries, all additional
beneficial interests acquired by LIFT and each of its subsidiaries, any and all
certificates or instruments evidencing or creating those interests and all
property received, receivable or otherwise distributable in respect of or in
exchange for those interests;
(3) all of the non-trustee accounts, all funds in those accounts, all notes
and other instruments delivered to or otherwise possessed by the security
trustee for or on behalf of LIFT and each of its subsidiaries and all property
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing;
(4) all rights of LIFT and each of its subsidiaries to each other Account at
any time established and all cash, investment property, investment earnings,
securities, instruments or other property at any time credited to any Account;
(5) all other investment property of LIFT and each of its subsidiaries,
including all investments made or acquired from or with the proceeds of any
Account, and all property received, receivable or otherwise distributed in
respect of or in exchange for any or all of the foregoing;
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(6) with respect to LIFT, all of LIFT's right, title and interest in all
security assignments, cash deposit agreements and other security agreements
executed in its favor by any subsidiary and all of LIFT's right, title and
interest in all deposit accounts, all property held in those deposit accounts
and all certificates and instruments provided to it as security under any such
agreement;
(7) with respect to LIFT and its subsidiaries, all of the subsidiary's
right, title and interest in all leases to which it is or may from time to time
be party and any leasing arrangements with respect to such leases including all
rights to receive moneys due and to become due under a lease, all rights to
receive proceeds of any insurance, indemnity, warranty or guaranty as to a
lease, claims for damages arising out of a default under a lease, all rights
under a lease with respect to any subleases of the aircraft subject to that
lease and the right to terminate a lease, and to compel performance and
otherwise exercise all remedies under a lease;
(8) all of LIFT's and each of its subsidiaries' right, title and interest in
the servicing agreement and all other service agreements between any such entity
and a service provider;
(9) with respect to LIFT and each of its subsidiaries, all of the member's
right, title and interest in all eligible credit facilities not consisting of a
cash collateral account and swap agreements and all rights to administer, draw
upon and otherwise deal with each such eligible credit facility and to
administer and otherwise deal with each such swap agreement;
(10) with respect to LIFT and each of the subsidiaries, all of the member's
right, title and interest in all acquisition agreements;
(11) with respect to LIFT and each of its subsidiaries, all of the member's
right, title and interest in the personal property identified in a supplement to
the security trust agreement executed and delivered by such member to the
security trustee; and
(12) all proceeds of any and all of the foregoing.
If the notes have not been accelerated, LIFT and each of its subsidiaries
are entitled to exercise all voting and other consensual rights pertaining to
the stock and beneficial interests included in the collateral. In doing so, the
member may not breach any other obligation and may not exercise or refrain from
exercising any such right if in its judgment that would materially and adversely
affect the value of any part of the stock and beneficial interest collateral.
CLASS A CONTINGENT COLLATERAL ACCOUNT
The initial beneficial interest holders funded, on behalf of LIFT, a
contingent collateral account for the Class A Notes with $3 million on June 26,
2001. All investment earnings on investments in that account will be retained in
the account. In addition, any funds and the proceeds of any investments in the
contingent collateral account for the Class A Notes will be released to the
beneficial interest holders:
(1) at any time, whether or not any default notice has been given and any
acceleration event has occurred, if the rating agencies rating the notes confirm
to LIFT that they will not lower, qualify or withdraw their ratings on the notes
as a result;
(2) on June 30, 2006, unless a default notice has been given or an
acceleration event has occurred; and
(3) to the extent that at any time prior to June 30, 2006, whether or not
any default notice has been given and any acceleration event has occurred, the
security trustee has received one or more non-interest bearing promissory notes
having a face amount of $10 thousand for each $65.20 released and issued by an
individual or an entity that is a direct or indirect beneficial interest holder
of LIFT or any affiliate of any such beneficial interest holder and that, at the
time of issuance, has a net worth of
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at least $10 million. No such promissory note may be in a principal amount that
exceeds 7.5% of the aggregate principal amount of the Class A Notes. No such
promissory note may be released, unless replaced by one or more promissory notes
in the same aggregate amount issued by the issuer of the replaced promissory
note or an individual or entity having a net worth of at least the greater of
$10 million and the face amount of the promissory note issued by that individual
or entity, prior to the repayment in full of the Class A Notes.
Any funds and investments held in the contingent collateral account for the
Class A Notes by the security trustee will be available for the benefit of the
holders of the Class A Notes only after a default notice has been given or an
acceleration event has occurred and only to the extent of a shortfall, if any,
in the payment of principal and interest on the Class A Notes after the security
trustee has exhausted all other remedies against the aircraft and leases of LIFT
and applied the proceeds of the disposition or liquidation of all collateral to
the repayment of Class A Notes.
In addition to the conditions for availability, the security trustee may
only make a demand under the promissory notes to the extent that the aggregate
face amount of the promissory notes exceeds the aggregate proceeds of the
disposition or liquidation of all collateral securing the Class A Notes
following the exercise of remedies.
Because the contingent collateral account for the Class A Notes will be
available, if at all, in only very limited circumstances and may be released and
because the promissory notes will be issued, if at all, by as yet unidentified
persons or entities, you should not rely on the contingent collateral account
for the Class A Notes or any such promissory notes as a material or assured
source of payment for any Class A Note.
GOVERNING LAW AND JURISDICTION
The indenture and the notes are governed by the laws of the State of New
York. LIFT and its subsidiaries have submitted to the jurisdiction of the United
States Federal and New York State courts located in The City of New York for all
purposes of the indenture and the notes.
REPORTS TO NOTEHOLDERS
On the second business day before each payment date, the administrative
agent must send to the trustee, and the trustee must then send to each holder of
notes, a monthly report prepared by the administrative agent regarding payments
to be made on that payment date. The monthly report will list the following
information:
(1) Regarding each payment date,
(a) the balances on deposit on the calculation date immediately
preceding the prior payment date;
(b) the aggregate amounts of deposits and withdrawals between that
calculation date and the calculation date immediately preceding the payment
date; and
(c) the balances on deposit in the expense account, collections
account, any cash collateral account and lessee funded account on the
calculation date immediately preceding that payment date.
(2) Analysis of expense account activity balance on the preceding
calculation date
Net transfer to the expense account during the period between the prior
calculation date and the relevant calculation date
Payments during period between the prior calculation date and the relevant
calculation date
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--Payments on the prior payment date
--Other payments
Balance on relevant calculation date
(3) Analysis of collections account activity
Balance on the preceding calculation date
Required Expense Amount for the current and preceding payment date
Net transfer to lessee funded accounts
Collections during the period
Drawings under any liquidity facilities
Aggregate note payments
Swap payments
Repayments of drawings under liquidity facilities
Balance on relevant calculation date separately stating the amount of cash
reserve that must be retained in the collections account
Analysis of current payment date distributions
(4) Payments on the notes
(a) Floating rate notes by class and, if applicable, subclass
--Applicable LIBOR for the current interest accrual period
--Applicable margin for the current interest accrual period
--Applicable interest rate for the current interest accrual period
--Interest Amount payable
--Maturity Step-Up Interest
--Registration Step-Up Interest
--Additional Interest
--Opening outstanding principal balance
--Minimum Principal Payment Amount
--Scheduled Principal Payment Amount
--Redemption Price
--Amount allocable to principal
--Amount allocable to premium
--Other principal reductions
--Closing outstanding principal balance
(b) Fixed rate notes by class and, if applicable, subclass
-- Interest rate
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-- Interest Amount payable
-- Opening outstanding principal balance
-- Minimum Principal Payment Amount
-- Scheduled Principal Payment Amount
-- Redemption Price
-- Amount allocable to principal
-- Amount allocable to premium
-- Other principal reductions
-- Closing outstanding principal balance
(5) Floating rate notes information for next interest accrual period by
subclass
LIBOR
Margin
Interest rate
(6) Payments per $100,000 initial outstanding principal balance of notes
by subclass
Opening outstanding principal balance
Total principal payments
Closing outstanding principal balance
Total interest
Total premium
After the end of each calendar year or earlier if required by law, the
administrative agent must send the trustee for delivery to each person who at
any time during that calendar year was a holder of any notes a statement
containing the sum of the amounts calculated under items (4) and (6) above or,
if that person was a holder during only a portion of that calendar year, for the
applicable portion of that calendar year.
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BOOK-ENTRY REGISTRATION, GLOBAL CLEARANCE AND SETTLEMENT
BOOK-ENTRY REGISTRATION
The holders of notes will hold them through The Depositary Trust Company in
the United States, Clearstream, Luxembourg, or Euroclear Bank S.A./N.V. if they
are participants in these systems or indirectly through organizations that are
participants in these systems. Except as set forth below, the notes are
registered in the name of Cede & Co. as the nominee for DTC. Unless and until
definitive notes are issued, all references in this section to actions by
holders of notes will refer to actions taken by DTC upon instructions from
participants whose securities are held by DTC. All references in this prospectus
to distributions, notices, reports and statements to you will refer to
distributions, notices, reports and statements, respectively to DTC or Cede &
Co., as the registered holder of the notes, or to DTC participants for
distribution to you in accordance with DTC procedures.
Clearstream, Luxembourg and Euroclear will hold omnibus positions on behalf
of their participants through customers' securities accounts in the names of
Clearstream, Luxembourg and Euroclear Bank S.A./N.V., on the books of their
respective depositaries, which, in turn, will hold those positions in customers'
securities accounts in the depositaries' names on the books of DTC.
Transfers between DTC participants will occur in the ordinary way in
accordance with DTC rules. Transfers between participating organizations whose
securities are held by Clearstream, Luxembourg and participants in Euroclear
will occur in the ordinary way in accordance with the applicable rules and
operating procedures of Clearstream, Luxembourg and Euroclear.
Cross-market transfers between persons holding directly or indirectly
through DTC participants, on the one hand, and directly or indirectly through
Clearstream, Luxembourg participants or Euroclear participants, on the other,
will be effected by DTC in accordance with DTC rules on behalf of Clearstream,
Luxembourg or Euroclear, by its respective depositary. Cross-market transactions
will, however, require delivery of instructions to Clearstream, Luxembourg or
Euroclear, as the case may be, by the counterparty in the applicable system in
accordance with its rules and procedures and within its established deadlines.
If the transaction meets its settlement requirements, Clearstream, Luxembourg or
Euroclear will deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Clearstream, Luxembourg
participants and Euroclear participants may not deliver instructions directly to
the depositaries.
Because of time-zone differences, credits of beneficial interests in the
global notes received in Clearstream, Luxembourg or Euroclear as a result of a
transaction with a DTC participant will be made during the securities settlement
processing day dated the business day following the DTC settlement date. Any
credits or transactions in notes settled during the processing will be reported
to the relevant Clearstream, Luxembourg participant or Euroclear participant on
that business day. Cash received in Clearstream, Luxembourg or Euroclear as a
result of sales of beneficial interests in the global notes by or through a
Clearstream, Luxembourg participant or Euroclear participant to a DTC
participant will be received with value on the DTC settlement date but will be
available in the relevant Clearstream or Euroclear cash account only as of the
business day following settlement in DTC.
DTC
DTC is a limited purpose trust company organized under New York law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for DTC participants and to facilitate the
clearance and settlement of securities transactions between DTC participants
through electronic book-entry changes in accounts of DTC participants, which
eliminates the need for physical movement of certificates. DTC
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participants include securities brokers and dealers, banks, trust companies and
clearing corporations and may in the future include other organizations.
Indirect access to the DTC system also is available to indirect participant's
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC participant either directly or
indirectly.
If you are not a DTC participant but want to purchase, sell or otherwise
transfer ownership of, or other interests in, beneficial interests in global
notes, you can do so only through DTC participants. Indirect participants of DTC
are also required to effect transfers through a DTC participant.
Payments of interest, principal and premium on the notes will be made to DTC
and are the responsibility of LIFT. You will receive all distributions of
interest, principal and premium on the notes from the trustee or a paying agent
through DTC participants and indirect participants. Disbursement of these
payments to DTC participants will be the responsibility of DTC and disbursement
of payments to you will be the responsibility of DTC participants and indirect
participants. DTC's practice is to credit DTC participants' accounts on the
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on that
payment date. Payments by DTC participants to their customers who own beneficial
interests in the global notes will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of that DTC participant. So long as a note is registered in the
name of Cede & Co., the only "noteholder" will be Cede & Co., as nominee for
DTC, and this nominee will be considered the sole owner or holder of the notes
for all purposes under the indenture and the notes. While so registered, you
will be permitted to exercise your rights only indirectly through DTC and DTC
participants.
Under the rules governing DTC and its operations, DTC is required to make
book-entry transfers of beneficial interests in the global notes among the DTC
participants on whose behalf it acts with respect to the notes and to receive
and transmit distributions of interest, principal and premium on the notes. DTC
participants and indirect participants similarly are required to make book-entry
transfers and receive and transmit these payments on behalf of their respective
beneficial interests in the global notes. The DTC rules also provide a mechanism
by which you will receive payments and be able to transfer your interests.
DTC has advised LIFT that it will take any action permitted to be taken by
you in respect of each class of notes under the indenture only at the direction
of one or more DTC participants to whose accounts beneficial interests in the
global note representing that class of notes is credited. Additionally, DTC has
advised LIFT that it will take these actions with respect to any percentage of
the outstanding principal amount of any class of notes only at the direction of
and on behalf of the DTC participants whose customers own that outstanding
principal amount. DTC may take conflicting actions with respect to different
classes of notes to the extent that those actions are taken on behalf of DTC
participants whose holdings include such different classes of notes.
CLEARSTREAM, LUXEMBOURG
Distributions with respect to notes held beneficially through Clearstream,
Luxembourg will be credited to cash accounts of Clearstream, Luxembourg
participants in accordance with Clearstream, Luxembourg's rules and procedures,
to the extent received by its Depositary. Clearstream, Luxembourg will take any
other action permitted to be taken by you under the indenture on behalf of a
Clearstream, Luxembourg participant only in accordance with its rules and
procedures and subject to its Depositary's ability to effect those actions on
its behalf through DTC.
EUROCLEAR
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the terms and conditions governing use of Euroclear and the
related operating procedures of the Euroclear
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system and applicable Belgian law. These terms, conditions and laws govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities of a particular class in Euroclear are held on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear operator acts under the Euroclear
terms and conditions and applicable Belgian Law only on behalf of Euroclear
participants, and has no record of or relationship with persons holding through
Euroclear participants.
Distributions with respect to notes beneficially held through Euroclear will
be credited to the cash accounts of Euroclear participants in accordance with
the terms and conditions and applicable Belgian Law, to the extent received by
its depositary. The Euroclear operator will take any other action permitted to
be taken by you under the indenture on behalf of a Euroclear participant only in
accordance with the Euroclear terms and conditions and applicable Belgian Law
and subject to its depositary's ability to effect those actions on its behalf
through DTC.
Although DTC, Clearstream, Luxembourg and Euroclear have agreed to the
foregoing procedures to facilitate transfers of notes among participants of DTC,
Clearstream, Luxembourg and Euroclear, they are under no obligation to perform
or continue to perform these procedures and these procedures may be discontinued
at any time.
DEFINITIVE NOTES
The notes of any class may be issued in fully registered certificated form,
or "definitive notes" to you or your nominees if (i) LIFT advises the trustee in
writing that DTC is no longer willing or able to discharge its responsibilities
properly as depositary for the notes and the trustee and LIFT is unable to
appoint a qualified successor within 90 days of giving that advice, (ii) LIFT,
at its option, elects to terminate the book-entry system through DTC or
(iii) after the occurrence of an indenture event of default with respect to any
class of notes, the holders of a subclass representing an aggregate of not less
than 51% of the aggregate outstanding principal balance of notes of that
subclass advise LIFT, the trustee and DTC through DTC participants in writing
that the continuation of a book-entry system through DTC or a successor
depositary is no longer in the best interests of the holders.
The trustee or a paying agent will make distributions of interest, principal
and any premium on any definitive notes directly to the holders of those notes
in whose names the definitive notes were registered at the close of business on
the record date. The distributions will be made by check mailed to the address
of such holder as it appears on the register maintained by the registrar. The
final payment on the definitive notes, however, will be made only upon
presentation and surrender of the definitive notes at the office or agency
specified in the notice of final distribution you.
Definitive notes will be freely transferable and exchangeable for definitive
notes of the same subclass at the office of the trustee or the offices of the
co-registrar in Luxembourg upon compliance with the requirements set forth in
the indenture. No service charge will be imposed for any registration of
transfer or exchange, but you may be required to pay a sum sufficient to cover
any tax or other governmental charge.
A note that is mutilated, destroyed, lost or stolen may be exchanged or
replaced, at the offices of the trustee or of the co-registrar in Luxembourg
upon presentation of the note or satisfactory evidence of its destruction, loss
or theft to the trustee or that co-registrar. An indemnity satisfactory to the
trustee or that co-registrar may be required at your expense before a
replacement note will be issued. You will be required to pay any tax or other
governmental charge imposed and the fees and expenses of the trustee and the
co-registrar and any other expenses incurred in connection with any exchange or
replacement.
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PLAN OF DISTRIBUTION
Based on an interpretation by the staff of the SEC in no-action letters
issued to third parties in similar transactions, LIFT believes that exchange
notes issued to you in the exchange offer in exchange for your Restricted Notes
may be offered for resale, resold and otherwise transferred by you, without
compliance with the registration and prospectus delivery provisions of the
Securities Act. This applies, however, only if
(1) you are acquiring the exchange notes in the ordinary course of your
business;
(2) you are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate, in a distribution
of the exchange notes;
(3) you are not an affiliate of LIFT; and
(4) you are not an initial purchaser who acquired Restricted Notes
directly from LIFT in the initial offering.
LIFT refers you to the "Morgan Stanley & Co. Inc." SEC No-Action Letter
available June 5, 1991, "Exxon Capital Holdings Corporation" SEC No-Action
Letter available May 13, 1988 and "Shearman & Sterling" SEC No-Action Letter
available July 2, 1993 for support of this belief.
Each broker-dealer that receives exchange notes for its own account pursuant
to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of those exchange notes. This prospectus may be used
by a broker-dealer in connection with resales of exchange notes received in
exchange for notes where exchange notes were acquired as a result of
market-making activities or other trading activities. LIFT has agreed that,
starting on the date of this prospectus and ending on the close of business on
the earlier to occur of
(1) the date on which all exchange notes held by broker-dealers eligible
to use the prospectus to satisfy their prospectus delivery obligations under the
Securities Act have been sold and
(2) the date 180 days after the consummation of the exchange offer.
LIFT will make this prospectus available to any broker-dealer that requests the
above documents for use in connection with any such resale. In addition, until
, all dealers effecting transactions in the exchange notes may be required
to deliver a prospectus. If this prospectus is amended or supplemented, that
version must be used instead.
LIFT will not receive any proceeds from any sale of exchange notes by
broker-dealers. exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
the prevailing market prices or at negotiated prices. Any resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer or
the purchasers of any such exchange notes. Any broker-dealer that resells
exchange notes that were received by it for its own account pursuant to the
exchange offer and any broker or dealer that participates in a distribution of
those exchange notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any resale of exchange notes and any
commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
LIFT has agreed to pay all expenses of the exchange offer other than
commissions or concessions of any broker-dealers. Included within those covered
expenses are the expense of one counsel for the
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holders of the Restricted Notes. LIFT has also agreed to indemnify
broker-dealers and other holders of the Restricted Notes against specified
liabilities, including liabilities under the Securities Act.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following, in the opinion of Milbank, Tweed, Hadley & McCloy LLP, are
the material United States federal tax consequences that result from the
purchase, ownership and disposition of exchange notes by U.S. holders and
non-U.S. holders. The following discussion does not purport to consider all the
possible tax consequences of the purchase, ownership or disposition of the
exchange notes, and it is not intended to reflect the individual tax position of
any holder. It deals only with exchange notes held as capital assets. Except as
expressly indicated, it does not deal with:
(1) specified categories of noteholders like financial institutions,
dealers in securities or foreign currencies, banks, other financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, and tax exempt entities;
(2) noteholders that hold initial notes as part of a synthetic security
or "hedge" or as a position in a "straddle", "conversion transaction" or other
integrated investment;
(3) noteholders that have a "functional currency" other than the U.S.
dollar; and
(4) investors in pass-through entities.
The summary is based upon the tax laws and practice of the United States as
in effect on the date of this prospectus, as well as judicial and original or
proposed administrative interpretations of these tax laws and practice available
on or before the date of this prospectus. All of the foregoing are subject to
change, and any such change could apply retroactively. You should note that no
rulings have been or will be sought from the U.S. Internal Revenue Service with
respect to the tax consequences described below, and LIFT cannot assure you that
the IRS or a court will not take contrary positions. You should consult your own
tax advisors in determining the federal income, alternative minimum, estate and
gift and any other tax consequences to you of the purchase, ownership and
disposition of the notes.
TAX CHARACTERIZATION OF LIFT AS A PARTNERSHIP
LIFT received a legal opinion from Chapman and Cutler, special tax counsel
to LIFT, that LIFT is not a corporation or an association or publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
If the IRS were to assert successfully that LIFT is a corporation or a
publicly traded partnership taxable as a corporation for federal income tax
purposes, LIFT would be subject to corporate income tax on its taxable income.
LIFT's taxable income would include all its income, including the income on the
leases on its aircraft, any swap agreements, interest on its accounts and gain
on the sale or disposition of its aircraft. This income may possibly be reduced
by depreciation on the aircraft, interest expense on the notes, servicing and
other fees and losses from the sale or disposition of aircraft. Any corporate
income tax could materially reduce or, in case of one or more classes of more
junior initial notes, completely deplete cash available to make payments on the
initial notes.
TAXATION OF U.S. HOLDERS
You will be considered a U.S. holder if you are
(1) a citizen or resident of the United States;
(2) a partnership, corporation or other entity created or organized in
or under the law of the United States or of any state of the United States;
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(3) a trust subject to control of one or more United States persons and
the primary supervision of a United States court; or
(4) an estate the income of which is subject to United States federal
income tax regardless of its source.
If you are not a U.S. holder you will be subject to the rules discussed
under "--Taxation of Non-U.S. Holders."
The exchange notes will be classified as debt for United States federal
income tax purposes.
Interest on an exchange note generally will be includible in your ordinary
income at the time the interest is accrued or received in accordance with your
regular method of accounting for United States federal income tax purposes.
Except as noted below, upon the sale, exchange or retirement of an exchange
note, you generally will recognize gain or loss equal to the difference between
the amount realized from that sale, exchange or retirement and your adjusted tax
basis in the exchange note. The amount so realized does not include accrued but
unpaid interest accrued between interest payment dates on the exchange note,
which is includible in income in accordance with your method of accounting as
described above. Your adjusted tax basis in an exchange note generally will
equal the amount you paid for the note, increased by any original issue discount
previously included by you in your income with respect to the note and decreased
by the amount of principal repayments previously received by you with respect to
the note. Any gain on the disposition of an exchange note will be capital gain
and will generally be U.S. source gain. You should consult your tax advisor
regarding the United States federal income tax treatment of capital gains, which
may be taxed at lower rates than ordinary income for certain non-corporate
taxpayers, and losses, the deductibility of which is subject to limitations.
Because the interest rate on the notes may be increased under certain
circumstances described in "Payments on the Notes--Interest", the exchange notes
may be treated as subject to special rules for debt instruments with contingent
payments. In addition, the notes may be subject to these rules because of the
possibility that premium may be paid with respect to the notes. These special
rules will not apply if the likelihood of the payment being made is remote or
the amount to be paid is incidental. LIFT has determined that the likelihood
that increased interest will be paid on any note is remote and expects that the
amount of this interest and the amount of premium, if paid, would be incidental.
There is no authority, however, addressing when payments are remote or
incidental and, if the IRS were successfully to challenge LIFT's position, the
timing and character of income and gain on sale of the notes could be different
from that otherwise described.
If you are purchasing more than one class of notes, you should be aware that
the IRS may treat the aggregate amount of notes owned by you as a single debt
instrument for purposes of determining whether the deemed single debt instrument
was issued with original issue discount. The effect of such a determination
might be to accelerate the reporting of your interest income on the notes. This
"aggregation rule" will not apply with respect to any class of notes purchased
by you if a substantial portion of that class is either (i) traded on an
established securities market or (ii) held by persons that are unrelated to you
and LIFT and its affiliates and that do not also hold notes of another class.
An exchange of exchange notes for Restricted Notes will not be treated as a
taxable exchange for United States federal income tax purposes. Accordingly, if
you exchange your Restricted Notes for exchange notes you will not recognize
income, gain or loss for United States federal income tax purposes. Your tax
basis in the exchange notes will be equal to your adjusted basis in the
Restricted Notes and your holding period will include the period during which
you held the Restricted Notes.
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TAXATION OF NON-U. S. HOLDERS
If you are not a U.S. holder, any payments of interest principal and
premium, on the exchange notes to you will not be subject to United States
federal withholding tax if, in the case of interest:
(1) you do not own, actually or constructively, 10% or more of the
capital or profits of LIFT;
(2) you are not a controlled foreign corporation related, directly or
indirectly, to LIFT through stock ownership;
(3) you are not a bank receiving interest described in
Section 881(c)(3)(A) of the Internal Revenue Code; and
(4) the statement requirement described in the next sentence has been
fulfilled by you or on behalf of you.
Sections 871(h) and 881(c) of the Internal Revenue Code require that, in
order to obtain the exemption from withholding tax described in the previous
sentence, either you, or a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business and that is holding an exchange note on your behalf, files
a statement with the trustee or its designated withholding agent to the effect
that you are not a U.S. holder. Under United States Treasury regulations which
apply to both stated interest and sale or exchange proceeds, the requirement
will be fulfilled if (i) the beneficial owner of an exchange note certifies on
IRS Form W-8BEN, Form W-8ECI or Form W-8IMY, as appropriate, under penalties of
perjury, that it is not a United States person and provides its name and address
or (ii) the financial institution holding the initial note on behalf of the
beneficial owner files a statement with the trustee or its designated
withholding agent to the effect that it or another financial institution has
received that statement from the noteholder and furnishes the withholding agent
with a copy of the statement. A beneficial owner that is a foreign estate or
trust--or a fiduciary of a foreign estate or trust--a foreign partnership--and
the partners in it--or a non-U. S. holder holding an exchange note through its
United States branch should consult its tax advisor regarding possible
additional reporting requirements. If any noteholder fails to provide the
certification described in clause (i) above or to satisfy the alternative
procedure described in clause (ii) above, withholding tax would apply at a rate
of 30% or, if the appropriate documentation is provided, a lower rate as may be
provided by an applicable treaty. LIFT has no obligation to indemnify any
noteholder with respect to any withholding taxes. Any resulting withholding tax
will, hence, reduce amounts otherwise distributable to such non-U. S. holder.
If interest or other income received with respect to an exchange note is
effectively connected with a United States trade or business conducted by you,
you may, although exempt from the withholding tax described in the preceding
paragraph, be subject to United States federal income tax and tax filing
requirements in respect of this interest in the same manner as if you were a
U.S. holder. In addition, if you are a corporation, you may be subject to a
branch profits tax equal to 30% or a lower treaty rate of your effectively
connected earnings and profits for the taxable year, subject to certain
adjustments.
If you are a non-U.S. holder you will not be subject to United States
federal income tax or withholding taxes on capital gain realized on the sale,
exchange or other disposition of an exchange note or upon receipt of premium, if
any, paid on a note held by you if (i) any such gain is not effectively
connected with your U.S. trade or business and (ii) you are an individual and
you are 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.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The trustee will be required to report annually to the IRS, and to each
holder of record of an exchange note, specified information, including the
holder's name, address and taxpayer identification
151
<Page>
number either a social security number or an employer identification number, the
aggregate amount of principal and interest paid and the amount of any tax
withheld. This obligation, however, does not apply to you if you are a
corporation, tax-exempt organization, qualified pension and profit-sharing
trust, individual retirement account or other organization specifically exempt
from these rules.
Payments made on the notes and proceeds from the sale of notes will not be
subject to a backup withholding tax of 31% unless, in general, a noteholder
fails to comply with applicable reporting procedures or otherwise fails to
establish an exemption from that tax under applicable provisions of the Internal
Revenue Code and the United States Treasury regulations under the Internal
Revenue Code. This backup withholding is not an additional tax and may be
credited against your United States federal income tax liability, provided that
required information is furnished to the IRS.
Under United States Treasury regulations, information reporting and backup
withholding will not apply to payments made by LIFT or any agent of LIFT if you
are a non-U. S. holder and the certifications required by Section 871(h) and
881(c) of the Internal Revenue Code described above under "--Taxation of Non-U.
S. Holders" are received, provided that LIFT or its agent does not have actual
knowledge that you are a U.S. holder. You are urged to consult your tax advisor
regarding the application of the backup withholding and information reporting
rules.
POSSIBLE ALTERNATIVE TREATMENT OF THE NOTES
Although LIFT believes the exchange notes should be treated as debt for
United States federal income tax purposes, in light of the highly-leveraged
capital structure of LIFT, LIFT recognizes that the IRS might argue that one or
more classes of the more junior exchange notes represent, in substance, an
equity interest in LIFT. If the IRS were successful in such a challenge, LIFT
might be treated as a publicly traded partnership that would be taxable as a
corporation with the adverse consequences described above under "--Tax
Characterization of LIFT as a Partnership." Treatment of the exchange notes as
equity interests in a publicly traded partnership could have additional adverse
tax consequences to a holder of such an initial note. Such a holder would be
treated as a shareholder of a corporation with the effect that all or a portion
of payments to that holder could be characterized as dividends instead of
interest and principal and payments to non-U. S. holders might be subject to
U.S. federal tax payments, tax return filing and withholding of United States
federal income tax requirements, and individual holders might be subject to
certain limitations on their ability to deduct their share of LIFT expenses.
STATE, LOCAL AND FOREIGN TAXES
You should consult your tax advisor with respect to state, local and foreign
tax considerations relevant to an investment in the notes.
152
<Page>
ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, or ERISA, imposes
requirements on persons who are fiduciaries with respect to employee benefit
plans that are subject to ERISA. A person who exercises discretionary authority
or control with respect to the management of the assets of a plan is a fiduciary
of that plan for purposes of ERISA. Before investing in a note, a fiduciary of a
plan should determine whether that investment is permitted under the plan's
governing instruments and is appropriate for the plan in view of the overall
investment policy of the plan and the composition and diversification of its
portfolio, taking into account the limited liquidity of the notes.
Other provisions of ERISA and the Internal Revenue Code prohibit specified
transactions that directly or indirectly involve the assets of plans subject to
ERISA and other types of plans and individual retirement accounts and persons
who have specified relationships to any such plan or account. Plans subject to
ERISA and these other types of plans and accounts are referred to as "plans". In
particular, a sale or exchange of property or an extension of credit between a
plan and a related person might constitute a prohibited transaction unless an
exemption applies. Each of LIFT and GE Capital Aviation Services, Limited may be
a related person with respect to a plan that purchases notes. Any plan that
proposes to purchase notes should determine that its purchase and holding of
notes will not give rise to a non-exempt prohibited transaction.
Statutory or administrative exemptions from the prohibited transaction rules
under ERISA and the Internal Revenue Code may be available to a plan that is
purchasing the notes. These exemptions might be available for a purchase of
notes:
(1) by a collective investment fund maintained by a bank;
(2) by an insurance company pooled separate account;
(3) by the general account plan of an insurance company;
(4) that is directed by an independent qualified professional asset
manager; or
(5) that is directed by an in-house asset manager
if all of the applicable terms and conditions of the exemption are satisfied.
Governmental plans and some church plans as defined under ERISA are not
subject to the prohibited transaction rules of ERISA and the Internal Revenue
Code. These plans may, however, be subject to federal, state or local laws or
regulations that may affect their investment in the notes. Any fiduciary of such
a governmental or church plan considering a purchase of the notes should
determine whether the purchase and holding of notes will result in a violation
of any such laws or regulations.
EACH PURCHASER OF AN EXCHANGE NOTE WILL BE DEEMED TO HAVE REPRESENTED AND
WARRANTED THAT EITHER NO ASSETS OF A PLAN HAVE BEEN USED TO PURCHASE THAT NOTE
OR THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THAT NOTE WILL NOT RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR THE INTERNAL REVENUE CODE.
ANY FIDUCIARY OF A PLAN, A GOVERNMENTAL PLAN OR A CHURCH PLAN CONSIDERING
THE PURCHASE AND HOLDING OF THE NOTES SHOULD CONSULT WITH ITS LEGAL ADVISORS
REGARDING THE CONSEQUENCES OF PURCHASING AND HOLDING ANY NOTES.
LEGAL MATTERS
Milbank, Tweed, Hadley & McCloy LLP, New York, counsel to LIFT and Morris,
James, Hitchens & Williams LLP, Wilmington, Delaware, special Delaware counsel
to LIFT will pass upon the legality of the exchange notes. In the initial
offering, Milbank, Tweed, Hadley & McCloy LLP also
153
<Page>
acted for the initial purchasers, the initial beneficial holders in LIFT and the
holders of the bridge notes.
LUXEMBOURG LISTING AND GENERAL INFORMATION
(1) LIFT confirms that there has been no material adverse change in its
financial condition since the date of its formation on June 13, 2001.
(2) LIFT will deposit a legal notice relating to the issue of the initial
notes with the Chief Registrar of the District Court in Luxembourg (Greffier en
Chef du Tribunal d'Arrondissement de et a Luxembourg) where such documents may
be examined and copies obtained. This is in connection with the application to
list the exchange notes, other than the Class D-1 and Class D-2 Notes, on the
Luxembourg Stock Exchange.
(3) The exchange notes have been accepted for clearance by DTC, Euroclear
and Clearstream, Luxembourg clearance systems with Common Codes of 52204P AC 3,
52204P AF 6, 52204P AJ 8, 52204P AM 1, 52204P AX 7, 52204P AQ 2 and 52204P AY 5
for the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class B-1 Notes, the Class B-2 Notes, the Class C-1 and the Class C-2 Notes,
respectively.
(4) The exchange notes have been accepted for clearance by DTC, Euroclear
and Clearstream, Luxembourg clearance systems with ISINs of US52204PAC32,
US52204PAF62, US52204PAJ84, US52204PAM14, US52204PAX78, US52204PAQ28 and
US52204PAY51 for the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes,
the Class B-1 Notes, the Class B-2 Notes, the Class C-1 and the Class C-2 Notes,
respectively.
(5) The exchange notes have been accepted for clearance by DTC, Euroclear
and Clearstream, Luxembourg clearance systems with CUSIP numbers 13488746,
13488762, 13488827, 13488843, 13488878, 13488835 and 13488975 for the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes, the Class B-1 Notes, the
Class B-2 Notes, the Class C-1 and the Class C-2 Notes, respectively.
(6) All documents mentioned in this prospectus that have been prepared in
connection with the offering will be available at the office of the Luxembourg
paying agent, so long as any of the initial notes are outstanding.
(7) LIFT has obtained or will obtain all necessary consents, approvals and
authorizations in connection with the issuance of the initial Class A, Class B
and Class C Notes.
(8) LIFT is not involved in litigation or arbitration proceedings relating
to claims on amounts that are material in the context of the issuance of
exchange notes, or, so far as LIFT is aware, is any litigation or arbitration
involving LIFT pending or threatened.
(9) The listing agent will notify the Luxembourg Stock Exchange promptly of
any change in the outstanding principal amounts of the exchange notes.
Information relating to changes in the outstanding principal amount of the
exchange notes will be made available at the offices of the Luxembourg paying
agent in the City of Luxembourg.
(10) As long as any of the exchange notes are outstanding, copies of the
monthly, quarterly and annual reports described in "Reports to Holders", and
copies of the annual appraisals described in "Description of the Notes Operating
Covenants Appraisal of Aircraft" will be made available at the offices of the
Luxembourg paying agent in Luxembourg, where copies may be obtained upon
request.
EXPERTS
The consolidated financial statements as of June 30, 2001 and for the period
from inception (June 13, 2001) to June 20, 2001 included in this prospectus have
been so included in reliance on the
154
<Page>
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The PricewaterhouseCoopers LLP report included in this prospectus relates to
LIFT's historical financial information. The report does not extend to the
prospective financial information included in this prospectus and should not be
read to do so. PricewaterhouseCoopers LLP has neither examined nor compiled the
prospective financial information included in this prospectus, and, accordingly,
PricewaterhouseCoopers LLP is not expressing any opinion or other form of
assurance with respect to that information. You should not consider
PricewaterhouseCoopers LLP as responsible for any such prospective information.
Valuations of the initial aircraft included or to be included in LIFT's
portfolio have been made by three expert aircraft appraisers: Aircraft
Information Services, Inc., BK Associates, Inc. and Morten Beyer & Agnew, Inc.
These valuations are discussed in detail elsewhere in this prospectus and are
included in reliance upon the authority of such firms as experts in giving
appraisals.
The section entitled "The Commercial Aircraft Industry" in this prospectus
is based upon information either compiled or produced by Simat, Helliesen &
Eichner, Inc. and is included on reliance upon the authority of that firm as an
expert, although Simat, Helliesen & Eichner, Inc. has not independently verified
the material provided to it by the outside sources referenced in that section.
Mr. David H. Treitel, one of LIFT's controlling trustees, serves as Chairman and
Chief Executive Officer of Simat, Helliesen & Eichner, Inc. See "Management of
LIFT."
155
<Page>
INDEX TO FINANCIAL STATEMENTS
<Table>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
Report of Independent Certified Public Accountants.......... F-2
Consolidated Balance Sheet.................................. F-3
Consolidated Statement of Operations........................ F-4
Consolidated Statement of Beneficial Interest Holders'
Equity and Comprehensive Income........................... F-5
Consolidated Statement of Cash Flows........................ F-6
Notes to Consolidated Financial Statements.................. F-7
</Table>
F-1
<Page>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees:
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, beneficial interest holders' equity and
comprehensive income, and of cash flows present fairly, in all material
respects, the financial position of Lease Investment Flight Trust and its
subsidiaries at June 30, 2001, and the results of their operations and their
cash flows for the period from inception (June 13, 2001) to June 30, 2001 in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
August 16, 2001, except as to
the last paragraph of Note 2
which is as of September 11, 2001
F-2
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
JUNE 30, 2001
-------------
ASSETS
Cash and cash equivalents................................... $ 95,082
Restricted cash............................................. 10,093
Rents receivable............................................ 783
Prepaids.................................................... 609
Aircraft, net............................................... 953,744
Deposit for aircraft purchases.............................. 356,925
Debt issuance costs, net.................................... 17,172
Derivative financial instruments............................ 10,971
----------
Total assets.......................................... $1,445,379
==========
LIABILITIES AND BENEFICIAL INTEREST HOLDERS' EQUITY
Accounts payable and accrued liabilities.................... $ 2,429
Deferred rental and other income............................ 6,149
Security deposits........................................... 10,095
Notes payable:
Class A-1................................................. 400,000
Class A-2................................................. 260,000
Class A-3................................................. 425,000
Class B-1................................................. 60,000
Class B-2................................................. 83,000
Class C-1................................................. 69,000
Class C-2................................................. 72,000
Class D-1................................................. 35,000
Class D-2................................................. 25,000
Unamortized Class D discounts............................. (16,078)
----------
Total notes payable, net of unamortized discount.......... 1,412,922
----------
Total liabilities..................................... 1,431,595
----------
Commitments and contingencies (Notes 4 and 7)............... --
Beneficial interest holders' equity:
Beneficial interest....................................... 2,813
Accumulated other comprehensive income.................... 10,971
----------
Total beneficial interest holders' equity............. 13,784
----------
Total liabilities and beneficial interest holders' equity... $1,445,379
==========
</Table>
The accompanying notes are an integral part of these financial statements.
F-3
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
PERIOD FROM
INCEPTION
(JUNE 13, 2001)
TO JUNE 30, 2001
-----------------
REVENUES:
Rental income from operating leases......................... $1,517
Other income................................................ 570
Interest income............................................. 46
------
Total revenues.............................................. 2,133
------
EXPENSES:
Interest.................................................... 1,310
Depreciation and amortization............................... 507
Administration and other.................................... 503
------
Total expenses.............................................. 2,320
------
NET LOSS.......................................................... $ (187)
======
</Table>
The accompanying notes are an integral part of these financial statements.
F-4
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF BENEFICIAL INTEREST HOLDERS' EQUITY AND COMPREHENSIVE
INCOME
FOR THE PERIOD FROM INCEPTION (JUNE 13, 2001) TO JUNE 30, 2001
(dollars in thousands)
<Table>
<Caption>
TOTAL BENEFICIAL
ACCUMULATED INTEREST
OTHER COMPREHENSIVE BENEFICIAL INTEREST HOLDERS'
INCOME HOLDERS' EQUITY EQUITY
------------------- ------------------- ----------------
Balance at June 13, 2001..................... $ -- $ -- $ --
Beneficial interest holders' contribution.... -- 3,000 3,000
-------
Other comprehensive income:
Net loss................................... -- (187) (187)
Change in fair value of derivative
financial instruments.................... 10,971 -- 10,971
-------
Total comprehensive income................. 10,784
------- ------ -------
Balance at June 30, 2001 $10,971 $2,813 $13,784
======= ====== =======
</Table>
The accompanying notes are an integral part of these financial statements.
F-5
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
PERIOD FROM
INCEPTION
(JUNE 13, 2001)
TO JUNE 30, 2001
----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................... $ (187)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization......................... 507
Note discount amortization............................ 20
Changes in assets and liabilities:
Rents receivable.................................... (783)
Restricted cash..................................... (10,093)
Prepaids............................................ (609)
Accounts payable and accrued liabilities............ 2,429
Deferred rental and other income.................... 6,149
Security deposits................................... 10,095
----------
Net cash provided by operating activities......... 7,528
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Aircraft.................................... (954,209)
Deposit for aircraft purchases.......................... (356,925)
----------
Net cash used in investing activities............. (1,311,134)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contribution of beneficial interest holders............. 3,000
Proceeds from notes payable............................. 1,412,902
Debt issuance costs..................................... (17,214)
----------
Net cash provided by financing activities......... 1,398,688
----------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 95,082
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ --
----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 95,082
==========
</Table>
The accompanying notes are an integral part of these financial statements.
F-6
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
NOTE 1--ORGANIZATION
Lease Investment Flight Trust ("LIFT") is a special-purpose statutory
business trust that was formed on June 13, 2001 ("Inception") under the laws of
the State of Delaware. On June 26, 2001 (the "Closing Date"), LIFT acquired one
direct subsidiary, LIFT Trust-Sub I ("LIFT I"), a Delaware business trust, from
Automatic LIFT I, LP ("Automatic"), its beneficial owner. LIFT I has various
domestic and foreign subsidiaries that own or lease aircraft. LIFT and its other
subsidiaries, all of which were organized prior to June 26, 2001, (collectively
the "LIFT group") are limited to acquiring, financing, re-financing, owning,
leasing, re-leasing, selling, maintaining and modifying commercial aircraft. The
name of LIFT's 35 subsidiaries and the number of aircraft owned (including
aircraft expected to be delivered) by each subsidiary are as follows:
<Table>
<Caption>
NUMBER OF AIRCRAFT
NAME OF SUBSIDIARY OWNED (SEE ALSO NOTE 4)
------------------ ------------------------
LIFT Trust Sub-I........................................ 0
LIFT SP Spain, LLC...................................... 5
LIFT Canada, LLC........................................ 2
LIFT GF UK, LLC......................................... 2
LIFT France, LLC........................................ 3
LIFT Turkey, LLC........................................ 2
LIFT Georgia, LLC....................................... 1
LIFT Portugal, LLC...................................... 1
LIFT Morocco, LLC....................................... 1
LIFT RS Brazil, LLC..................................... 1
LIFT EJ UK, LLC......................................... 1
LIFT VG Brazil, LLC..................................... 2
LIFT Indonesia, LLC..................................... 1
LIFT Arizona, LLC....................................... 1
LIFT Malaysia, LLC...................................... 1
LIFT Missouri, LLC...................................... 1
LIFT Italy, LLC......................................... 1
LIFT IB Spain, LLC...................................... 1
LIFT A2K UK, LLC........................................ 1
LIFT Russia, LLC........................................ 1
LIFT CEA China, LLC..................................... 5
ZIBAL Aircraft Leasing LLC.............................. 1
A320 Aircraft Leasing IX Corp........................... 0
A320 Aircraft Leasing X Corp............................ 0
MD82 Aircraft Leasing I Corporation..................... 0
MD82 Aircraft Leasing II Corporation.................... 0
MD82 Aircraft Leasing III Corporation................... 0
MD82 Aircraft Owner F Limited........................... 1
MD82 Aircraft Owner G Limited........................... 1
B737 Owner Limited...................................... 1
Sinope Limited.......................................... 1
LIFT Ireland Leasing Limited............................ 0
LIFT Indonesia Leasing, S.A.R.L......................... 0
LIFT Malaysian Leasing Limited.......................... 0
LIFT Bermuda Leasing Limited............................ 0
</Table>
The aircraft owned by Sinope Limited, B737 Owner Limited, MD82 Aircraft
Owner G Limited, and LIFT Italy, LLC are leased to LIFT Ireland Leasing Limited
and subleased to the ultimate
F-7
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
NOTE 1--ORGANIZATION (CONTINUED)
operators. The aircraft owned by LIFT Indonesia, LLC is leased to LIFT Indonesia
Leasing, S.A.R.L. and subleased to the ultimate operator. The aircraft owned by
LIFT Russia, LLC is subleased to LIFT Bermuda Leasing Limited and subleased to
the ultimate operator. The aircraft owned by LIFT Malaysia, LLC is leased to
LIFT Malaysian Leasing Limited and subleased to the ultimate operator.
The Trust Agreement provides for four trustees, an Owner Trustee and three
Controlling Trustees. The Owner Trustee will maintain the books and records of
the LIFT group. The three Controlling Trustees have the authority to manage the
property and affairs of the LIFT group under the Trust Agreement. One of the
Controlling Trustees, the Equity Trustee, was appointed by the beneficial
interest holders, while the other two Controlling Trustees are independent of
the beneficial interest holders. LIFT does not have any officers or employees
and has arranged for GE Capital Aviation Services, Limited ("GECAS"), Phoenix
American Financial Services, Inc., Wilmington Trust Company, Bankers Trust
Company and Credit Suisse First Boston to provide aircraft servicing, managerial
services, and financial advice.
On the Closing Date, LIFT I and its subsidiaries entered into an agreement
to acquire 39 commercial jet aircraft (the "Initial Aircraft") from General
Electric Capital Corporation and certain of its affiliates (together the
"Seller") from the proceeds of bridge notes issued on June 26, 2001. On the
Closing Date, the LIFT group completed a securitization transaction in which it
received proceeds from a private placement offering of notes (the "Initial
Notes") and simultaneously paid for the cash purchase price of LIFT I and repaid
the bridge notes on behalf of LIFT I. Automatic holds the beneficial interest in
the LIFT group and held the beneficial interest in LIFT I. The LIFT group's
obligations, including its debt obligations, are not obligations of, or
guaranteed by any lessee, Automatic, the Seller, the trustees and holders of the
beneficial interest of LIFT or any other person.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America. All significant intercompany accounts and transactions have been
eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. While management believes that the
estimates and related assumptions used in the preparation of the financial
statements are appropriate, actual results could differ from those estimates.
Significant estimates are made in the assessment of the collectibility of
receivables, depreciable lives and estimated residual values of leased aircraft.
CASH AND CASH EQUIVALENTS
The LIFT group classifies highly liquid investments with original maturities
of three months or less from the date of purchase as cash equivalents.
F-8
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AIRCRAFT AND OPERATING LEASES
Aircraft are recorded at cost reflecting individual account values
established on the basis of appraisals by LIFT I and transferred at such cost to
LIFT. Aircraft are depreciated on a straight-line basis over the estimated life
to its estimated residual value. Generally, aircraft and aircraft equipment are
depreciated over estimated useful lives of 30 years from the date of manufacture
to a 15% estimated residual value. Certain major additions and modifications to
aircraft may be capitalized. The LIFT group's estimates are reviewed
periodically to ensure continued appropriateness.
Revenue under operating leases is recognized as rental income on a
straight-line basis over the lease term.
As of June 30, 2001, 31 of the Initial Aircraft had been delivered. Pursuant
to an asset purchase agreement with the Seller, the LIFT group is entitled to
all cash received (and earned) subsequent to June 26, 2001 by the Seller that
relate to the aircraft identified for purchase. Accordingly, the LIFT group
recorded cash received from the Seller for lease payments for undelivered
aircraft as "other income" in its statement of operations. Other cash
transferred by the Seller representing security deposits paid by lessees have
been recorded by the LIFT group as security deposits.
Aircraft are periodically reviewed for impairment in accordance with
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS 121"). An impairment loss is recognized when the fair value of the
undiscounted future cash flows of the aircraft is less than its net book value.
The fair value of the aircraft is based on independent appraisals of the
aircraft. The appraisals assume, among other things, that the aircraft are
utilized normally in an open, unrestricted and stable market. Short-term
fluctuations in the market place are disregarded and it is assumed that there is
no necessity either to dispose of a significant number of aircraft
simultaneously or to dispose of aircraft quickly.
MAINTENANCE RESERVES
Certain leases for the Initial Aircraft require the lessee to bear the
obligation for maintenance costs on airframes and engines, and require the
lessee to make certain payments to the lessor, calculated on measures of usage
to cover the expected costs of scheduled maintenance charges, including major
airframe and engine overhauls. Reserves are maintained at amounts considered
adequate to cover those expected payments for maintenance costs.
The sellers of the aircraft will retain their respective reserve accounts
with respect to maintenance reserve payments, if any, on the Initial Aircraft.
Maintenance obligations will be paid from funds on deposit in the collections
account and, to the extent available for those purposes, funds obtained from any
cash collateral accounts or under eligible credit facilities that may be
established in the future. There is no assurance that cash flows generated from
the Initial Aircraft will be sufficient to satisfy maintenance obligations, to
pay expenses and to service interest and principal on the notes.
INCOME TAXES
The operating results of the LIFT group are included in the tax return of
their beneficial interest holders. The LIFT group is, therefore, not subject to
U.S. Federal, State, and local income taxes.
F-9
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITIES
All derivatives are recognized on the balance sheet at their fair value. On
the date that the LIFT group entered into its derivative contract, it designated
the derivative as a hedge of the variability of future cash flows that are to be
received or paid in connection with a recognized asset or liability (a "cash
flow" hedge), to which the LIFT group is party. Changes in the fair value of a
derivative that is highly effective as - and that is designated and qualifies as
- a cash flow hedge, to the extent that the hedge is effective, are recorded in
other comprehensive income, until earnings are affected by the variability of
cash flows of the hedged transaction. Any hedge ineffectiveness (which
represents the amount by which the changes in the fair value of the derivative
exceed the variability in the cash flows of the forecasted transaction) is
recorded in current-period earnings. Changes in the fair value of derivative
trading and non-hedging instruments are reported in current-period earnings.
The LIFT group formally documented all relationships between hedging
instruments and hedged items, as well as its risk-management objective and
strategy for undertaking various hedge transactions. This process includes
linking all derivatives that are designated as cash flow hedges to specific
assets and liabilities on the balance sheet. The LIFT group also formally
assesses (both at the hedge's inception and on an ongoing basis) whether the
derivatives that are used in hedging transactions have been highly effective in
offsetting changes in the cash flows of hedged items and whether those
derivatives may be expected to remain highly effective in future periods. When
it is determined that a derivative is not (or has ceased to be) highly effective
as a hedge, the LIFT group will discontinue hedge accounting prospectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments", requires disclosure of the fair value of
financial instruments, for both assets and liabilities recognized and not
recognized on the balance sheet, for which it is practicable to estimate fair
value. Fair values of the LIFT group's financial instruments where applicable
are based on pricing models or formulas using assumptions about future interest
rates, interest volatility and other factors.
RISKS AND UNCERTAINTIES
On September 11, 2001, terrorists high-jacked and crashed four United States
commercial aircraft, with significant loss of life, property damage and economic
disruption. As a result, air travel in the United States was suspended for
several days, restrictions have been placed on United States air travel, airline
costs such as aircraft insurance and aircraft security have increased and
passenger demand for air travel has significantly declined. These events may
also affect the ability of airlines to obtain insurance.
The impact of the terrorist attacks cannot be completely assessed at this
time. The U.S. and European governments are considering providing grants, loan
guarantees and other forms of financial assistance to help stabilize the
industry. Nevertheless, virtually all airlines, and particularly those serving
the United States, either directly or indirectly, will likely incur higher costs
and generate lower revenues, which would adversely impact their financial
position. Most U.S. carriers have already announced their intention of
furloughing a significant percentage of their workforce.
F-10
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Most U.S. airlines and some non-U.S. airlines have already announced their
intention to reduce capacity and ground aircraft. Any additional terrorist
attacks or any military or economic responses by the Unites States may further
stimulate increases in airline costs and cause further declines in air travel
demand.
These conditions, particularly should they continue, may affect the lessees'
ability to make rent and other lease payments, may impair the ability of LIFT to
release aircraft on a timely basis and at favorable rates and may reduce the
value of the aircraft for possible sale. These factors could have an adverse
effect on LIFT's ability to pay the notes on a timely basis and in full.
NOTE 3--CASH BALANCES
The LIFT group maintains various cash accounts as required by the trust
indenture dated June 26, 2001 (the "Indenture"), including rental accounts, a
collections account, an expense account, and lessee funded accounts. In
addition, the equity owners of LIFT funded a contingent collateral account,
which is available in very limited circumstances to support the Initial Class A
Notes.
All payments (with limited exceptions) under the leases, subsequent to
June 26, 2001 are deposited into the rental accounts and subsequently swept to
the collection account within one business day of receipt. LIFT maintains a cash
reserve balance in the collection account in such amount as determined monthly
in accordance with the Indenture. At the Closing Date, the cash reserves
included in the collection account were $83.0 million. The cash reserves are
intended to provide a source of liquidity for the payment of expenses, swap
payments and interest on certain classes of notes. Expenses of the LIFT group
are generally paid out of the expense account which is generally funded through
transfers from the collections account.
The lessee funded accounts are not available for general use. Security
deposits and maintenance reserve payments from lessees that are required to be
segregated from other funds are deposited into the lessee funded accounts. The
balances in the lessee funded accounts at June 30, 2001 were $10.1 million and
represented security deposits transferred by the Seller.
On the Closing Date, $3.0 million was deposited into a contingent collateral
account related to the Initial Class A Notes by the initial beneficial interest
holders.
F-11
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
NOTE 4--AIRCRAFT UNDER OPERATING LEASES
On the Closing Date, LIFT I agreed to purchase 39 commercial jet aircraft
from the Seller having an aggregate cost of $1,310.5 million pursuant to an
asset purchase agreement. At June 30, 2001, 31 aircraft had been delivered to
the LIFT group, as follows:
<Table>
<Caption>
JUNE 30, 2001
--------------
(IN THOUSANDS)
Aircraft under operating lease.............................. $940,478
Less accumulated depreciation............................... (455)
--------
Aircraft under operating leases, net........................ 940,023
Aircraft off-lease.......................................... 13,731
Less accumulated depreciation............................... (10)
--------
Aircraft off-lease, net..................................... 13,721
Aircraft, net............................................... $953,744
========
</Table>
All aircraft are compliant with Stage 3 noise levels set out in the United
States Federal Aviation Regulations. An analysis of the various lessee
expiration periods of the aircraft under operating leases (including aircraft
expected to be delivered) is as follows at June 30, 2001:
<Table>
On lease for a further period of:
More than five years........................................ 13
From one to five years...................................... 23
Less than one year.......................................... 2
Off-lease................................................... 1
--------
Total aircraft portfolio.................................... 39
========
</Table>
As of June 30, 2001, 38 of the LIFT group's 39 aircraft (including aircraft
expected to be delivered) were on lease to 24 different lessees in 17 different
countries and one aircraft was off-lease.
The cost of undelivered aircraft is $356.9 million as of June 30, 2001. If
the Seller is unable to deliver any of the remaining 8 aircraft on or before
January 22, 2002, the Seller must deliver a substitute aircraft satisfying
certain conditions or repurchase the undelivered aircraft for the depreciated
value of that aircraft less an adjustment factor relating to usage of any
related maintenance reserves. Any proceeds received from the Seller for
repurchase of such undelivered aircraft will be applied towards principal
reduction of the outstanding notes payable.
F-12
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
NOTE 4--AIRCRAFT UNDER OPERATING LEASES (CONTINUED)
At June 30, 2001, future scheduled minimum lease contract payments to be
received under operating leases for the years ended December 31 (including
aircraft expected to be delivered), are as follows: (dollars in thousands)
<Table>
2001(July 1 - December 31).................................. $ 74,275
2002........................................................ 144,748
2003........................................................ 115,337
2004........................................................ 97,316
2005........................................................ 75,598
Thereafter.................................................. 308,370
--------
Total....................................................... $815,644
========
</Table>
The LIFT group may acquire additional aircraft and related leases from
Automatic or the Seller using proceeds from the issuance of additional notes and
equity. Any such acquisition of additional aircraft by the LIFT group will be
subject to the terms of the Indenture and will require written confirmation from
the rating agencies that they will not lower, qualify or withdraw their ratings
on the notes as a result of such issuance.
NOTE 5--NOTES PAYABLE
On the Closing Date, the LIFT group completed a private placement offering
of $1,429.0 million of securitized notes on a basis exempt from registration
under the Securities Act of 1933, as amended. The LIFT group utilized the
proceeds from such Initial Notes as payment for the acquisition of LIFT I from
Automatic and repayment of the bridge note that LIFT I issued to acquire the
Initial Aircraft.
Underwriting and other debt issuance costs of $17.2 million which were
incurred in connection with the offering are being amortized using the effective
interest method over the expected life of the Initial Notes, which is currently
estimated to be 17 years.
The repayment terms of each class of notes are such that certain principal
amounts are expected to be repaid on dates which are based on certain operating
assumptions (the "Expected Final Payment Date") or refinanced through the
issuance of new notes, but in any event are ultimately due for repayment on
specified final maturity dates (the "Final Maturity Date"). The interest rates,
Expected
F-13
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
NOTE 5--NOTES PAYABLE (CONTINUED)
Final Payment Dates, Final Maturity Dates and the estimated fair values
applicable to each class of the Initial Notes at June 30, 2001 are listed as
follows (dollars in thousands):
<Table>
<Caption>
INITIAL EXPECTED JUNE 30, 2001
PRINCIPAL FINAL FINAL FINAL ESTIMATED
CLASS OF NOTE AMOUNT INTEREST RATES PAYMENT DATES MATURITY DATES FAIR VALUES
------------------ ---------- ------------------ ---------------- -------------- -------------
(UNAUDITED)
Class A-1 $ 400,000 LIBOR + 0.390% July 15, 2003 July 15, 2031 $ 400,200
Class A-2 260,000 LIBOR + 0.430% July 15, 2004 July 15, 2031 260,130
Class A-3 425,000 LIBOR + 0.430% August 15, 2010 July 15, 2016 425,213
Class B-1 60,000 LIBOR + 1.120% May 15, 2018 July 15, 2031 60,030
Class B-2 83,000 7.124% May 15, 2018 July 15, 2031 83,066
Class C-1 69,000 LIBOR + 2.120% May 15, 2018 July 15, 2031 69,048
Class C-2 72,000 8.093% May 15, 2018 July 15, 2031 72,065
Class D-1 35,000 LIBOR + 2.000% May 15, 2018 July 15, 2031 24,605
Class D-2 25,000 8.000% May 15, 2018 July 15, 2031 18,437
---------- ----------
$1,429,000 $1,412,794
========== ==========
</Table>
The 30-day LIBOR rate with respect to these notes as of the balance sheet
date was 3.79%.
If the Class A-1 or Class A-2 Notes are not repaid on or before their
Expected Final Payment Date, such class of notes will accrue interest thereafter
at the stated interest rate plus 0.50% per annum ("Maturity Step-Up Interest").
The LIFT group is obligated to use its best efforts to consummate an
exchange offer (the "Exchange Offer") pursuant to which the Initial Notes, other
than Class D Notes, would be exchanged for substantially similar debt securities
issued pursuant to an effective registration statement under the Securities Act
of 1933. If the Exchange Offer is not consummated on or before March 23, 2002,
the Initial Notes will accrue interest at the stated interest rate, plus 0.50%
per annum from that date until the date that the Exchange Offer is consummated.
The LIFT group has the right to make an optional redemption of any Initial
Notes. Should LIFT choose to exercise an early redemption of any of the Initial
Notes, it may be required to pay a redemption premium as required by the
Indenture.
The dates on which principal repayments on the notes will actually occur
will depend on the cash flows generated by the rental income from the LIFT
group's portfolio of aircraft, the LIFT group's ability to refinance any or all
of the notes and the amount of operating costs incurred in the ordinary course
of business. Amounts received by the LIFT group and available for distribution
are paid in accordance with the priorities specified in the Indenture.
NOTE 6--DERIVATIVE FINANCIAL INSTRUMENTS
INTEREST RATE SWAPS
Interest incurred by the LIFT group on the notes and the yield from rental
income received by the LIFT group under operating leases are based on
combinations of variable and fixed measures of
F-14
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
NOTE 6--DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
interest rates. The LIFT group is exposed to interest rate risk to the extent
that the mix of variable and fixed interest obligations under the notes do not
correlate to the mix of variable and fixed yields from rental income under
leases. The LIFT group has engaged advisors to monitor interest rates
continuously in order to mitigate its exposure to unfavorable variations. The
LIFT group will utilize one or more interest rate swaps that shift the risk of
fluctuations in floating rates to a counterparty in exchange for fixed payments
by the LIFT group. Risks in the use of these instruments arise from the possible
inability of the counterparties to meet the terms of their contracts and from
market movements in securities values and interest rates. Counterparty risk will
be monitored on an ongoing basis and the counterparties will be subject to the
prior approval of the controlling trustees. The counterparties will consist
primarily of the affiliates of major United States and European financial
institutions and special-purpose derivative vehicles that will have credit
ratings, or will provide collateralization arrangements, consistent with
maintaining ratings of the notes.
At June 30, 2001, the LIFT group was a party to an interest rate swap
agreement which it entered into on June 13, 2001 and became effective with the
Closing Date. Under the agreement, the LIFT group will pay a fixed rate of
interest to the counterparty based on an amortizing notional amount and, in
turn, the counterparty will pay the LIFT group a rate of interest based on the
same amortizing notional amount based on LIBOR as set out below (dollars in
thousands):
<Table>
<Caption>
INITIAL RATE TO BE RATE TO BE
NOTIONAL PAID BY THE RECEIVED BY THE
AMOUNT LIFT GROUP LIFT GROUP MATURITY DATE
--------------------- ----------- --------------- -------------
$1,224.02 5.79% LIBOR June 15, 2011
</Table>
On June 30, 2001, the fair value of the interest rate swap was approximately
$11.0 million. At June 30, 2001, the LIFT group estimates future interest rate
swap expenses for the year ended December 31, 2001 will be approximately
$13.0 million.
NOTE 7--COMMITMENTS AND CONTINGENCIES
In accordance with the terms of a servicing agreement (the "Servicing
Agreement"), GECAS is performing certain aircraft related services with respect
to the LIFT group's aircraft portfolio. Such activities include the collection
of rents and other amounts due from lessees, the monitoring of maintenance,
insurance and other obligations under the aircraft leases, the enforcement of
rights against the lessees, the remarketing of aircraft for re-lease or sale and
the performance of other specified aircraft-related services. In accordance with
the Servicing Agreement, fees payable to GECAS by LIFT include base fees and
fees calculated as a percentage of lease rentals received, in addition to
certain incentive based fees.
The Servicing Agreement expires on the later of (i) the payment in full of
all amounts due on the notes and other similar obligations and all amounts due
to the holders of beneficial interests in LIFT and (ii) the date on which LIFT
and its subsidiaries cease to own any aircraft. Each party has the right to
terminate the Servicing Agreement under specified circumstances.
Additionally, LIFT has arranged for Phoenix American Financial
Services, Inc., Wilmington Trust Company, Bankers Trust Company and Credit
Suisse First Boston to provide managerial services, and financial advice. The
aggregate annual fees for these services is estimated to be $0.8 million.
F-15
<Page>
LEASE INVESTMENT FLIGHT TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2001
NOTE 8--CONCENTRATION OF CREDIT RISK
Credit risk with respect to operating lease receivables is generally
diversified due to the number of lessees comprising the LIFT group's customer
base and the different geographic areas in which they operate. At June 30, 2001,
the LIFT group had leased aircraft (including aircraft expected to be delivered)
to 24 lessees in 17 countries. Also, on June 30, 2001, eighteen of the aircraft
are being leased to lessees domiciled in certain emerging markets, including
those located in Africa, Eastern Europe, the Middle East, Latin America and
Asia. The exposure of the LIFT group's aircraft to particular countries and
customers is managed partly through concentration limits and through obtaining
deposits from lessees and certain cash reserves.
F-16
<Page>
APPENDIX 1
INDEX OF SELECTED DEFINED TERMS
<Table>
Additional Interest......................................... 106
Adjusted Base Value......................................... 108
Adjusted Portfolio Value.................................... 108
Applicable Percentage....................................... 110
Assumed Principal Balance................................... 111
Assumed Principal Payments.................................. 111
Depreciation Factor......................................... 107
Interest Amount............................................. 106
Junior Note Blockage Amount................................. 116
Maturity Step-Up Interest................................... 106
Mezzanine Note Blockage Amount.............................. 116
Minimum Principal Payment Amount............................ 107
Net Sales Proceeds.......................................... 125
Note Target Price........................................... 125
Projected Principal Payment Amounts......................... 110
Redemption Premium.......................................... 111
Redemption Price............................................ 110
Registration Step-Up Interest............................... 106
Required Expense Amount..................................... 117
Scheduled Principal Payment Amount.......................... 108
Scheduled Target Principal Balance.......................... 108
Senior Note Blockage Amount................................. 116
Subordinate Note Blockage Amount............................ 116
</Table>
<Page>
APPENDIX 2
AIRCRAFT TYPES DATA
AIRCRAFT TYPES(1)
<Table>
<Caption>
STAGE 3
NARROW/ TYPICAL NOISE PRODUCTION CURRENT ON
MANUFACTURER TYPE AND VARIANT WIDEBODY SEATS NO. & MFR OF ENGINES COMPLIANCE YEARS FLEET ORDER
------------ ---------------- -------- -------- -------------------- ---------- ---------- -------- --------
Airbus...... A320-200 Narrow 150 2 X CFM/IAE Yes 1987- 941 513
Boeing...... 737-300 Narrow 131 2 X CFM Yes 1984-1999 1052 0
Boeing...... 737-800 Narrow 160 2 X CFM Yes 1997- 451 367
Boeing...... 737-700 Narrow 135 2 X CFM Yes 1997- 294 502
Boeing...... 737-400 Narrow 147 2 X CFM Yes 1988-1999 475 0
Boeing...... 737-500 Narrow 111 2 X CFM Yes 1989-1999 385 0
Boeing...... 747-400 Wide 374 4 X RR, CF, PW Yes 1988- 425 26
Boeing...... 767-300ER Wide 231 2 X RR, CF, PW Yes 1986- 436 41
McDonnell Douglas MD82 Narrow 143 2 X PW Yes 1981-1997 535 0
McDonnell Douglas MD83 Narrow 147 2 X PW Yes 1984-1999 269 0
McDonnell DouglasMD11F Wide N/A 3 X CF/PW Yes 1989-2000 72 0
<Caption>
NO. OF
MANUFACTURER OPERATORS
------------ ---------
Airbus...... 107
Boeing...... 109
Boeing...... 61
Boeing...... 52
Boeing...... 76
Boeing...... 41
Boeing...... 38
Boeing...... 81
McDonnell Do 33
McDonnell Do 31
McDonnell Do 12
</Table>
SOURCE: AIRCLAIMS CASE DATABASE
(1) Data as of May 23, 2001
2
<Page>
APPENDIX 3
MONTHLY GROSS REVENUES BASED ON THE NOTE PAYMENT ASSUMPTIONS
<Table>
<Caption>
PAYMENT DATE GROSS
OCCURRING IN REVENUES ($)
------------ ------------
July 15, 2001........... 11,552,558
August 15, 2001......... 12,582,206
September 15, 2001...... 14,052,956
October 15, 2001........ 11,522,641
November 15, 2001....... 12,286,724
December 15, 2001....... 13,694,974
January 15, 2002........ 11,301,641
February 15, 2002....... 12,286,724
March 15, 2002.......... 13,757,474
April 15, 2002.......... 11,436,641
May 15, 2002............ 12,642,724
June 15, 2002........... 14,113,474
July 15, 2002........... 11,657,641
August 15, 2002......... 12,642,724
September 15, 2002...... 14,113,474
October 15, 2002........ 11,552,799
November 15, 2002....... 12,389,882
December 15, 2002....... 13,857,589
January 15, 2003........ 11,401,756
February 15, 2003....... 12,247,440
March 15, 2003.......... 13,509,386
April 15, 2003.......... 11,728,530
May 15, 2003............ 12,850,257
June 15, 2003........... 13,816,565
July 15, 2003........... 11,850,982
August 15, 2003......... 12,836,065
September 15, 2003...... 13,162,898
October 15, 2003........ 12,058,815
November 15, 2003....... 12,917,398
December 15, 2003....... 12,917,398
January 15, 2004........ 11,932,315
February 15, 2004....... 12,917,398
March 15, 2004.......... 12,917,398
April 15, 2004.......... 11,962,315
May 15, 2004............ 13,095,398
June 15, 2004........... 13,095,398
July 15, 2004........... 12,110,315
August 15, 2004......... 13,095,398
September 15, 2004...... 13,095,398
October 15, 2004........ 12,110,315
November 15, 2004....... 12,947,398
December 15, 2004....... 12,947,398
January 15, 2005........ 11,962,315
February 15, 2005....... 12,947,398
March 15, 2005.......... 12,947,398
April 15, 2005.......... 11,798,029
May 15, 2005............ 13,095,398
June 15, 2005........... 13,095,398
July 15, 2005........... 12,110,315
August 15, 2005......... 13,095,398
September 15, 2005...... 13,095,398
October 15, 2005........ 12,125,394
</Table>
<Table>
<Caption>
PAYMENT DATE GROSS
OCCURRING IN REVENUES ($)
------------ ------------
July 15, 2006........... 12,066,533
August 15, 2006......... 13,051,616
September 15, 2006...... 13,051,616
October 15, 2006........ 12,066,533
November 15, 2006 13,051,616
December 15, 2006....... 13,051,616
January 15, 2007........ 12,066,533
February 15, 2007....... 13,051,616
March 15, 2007.......... 13,051,616
April 15, 2007.......... 12,066,533
May 15, 2007............ 13,051,616
June 15, 2007........... 13,051,616
July 15, 2007........... 12,066,533
August 15, 2007......... 13,051,616
September 15, 2007...... 13,051,616
October 15, 2007........ 12,066,533
November 15, 2007....... 13,051,616
December 15, 2007....... 13,078,823
January 15, 2008........ 12,093,740
February 15, 2008....... 13,083,555
March 15, 2008.......... 13,100,192
April 15, 2008.......... 12,121,065
May 15, 2008............ 13,117,505
June 15, 2008........... 13,114,510
July 15, 2008........... 12,129,427
August 15, 2008......... 13,114,510
September 15, 2008...... 13,114,510
October 15, 2008........ 12,129,427
November 15, 2008....... 13,114,510
December 15, 2008....... 13,114,510
January 15, 2009........ 12,129,427
February 15, 2009....... 13,114,510
March 15, 2009.......... 13,114,510
April 15, 2009.......... 12,129,427
May 15, 2009............ 13,114,510
June 15, 2009........... 13,114,510
July 15, 2009........... 12,129,427
August 15, 2009......... 13,114,510
September 15, 2009...... 13,114,510
October 15, 2009........ 12,129,427
November 15, 2009....... 13,114,510
December 15, 2009....... 13,114,510
January 15, 2010........ 12,126,447
February 15, 2010....... 13,111,530
March 15, 2010.......... 13,111,530
April 15, 2010.......... 12,126,447
May 15, 2010............ 13,111,530
June 15, 2010........... 13,111,530
July 15, 2010........... 12,126,447
August 15, 2010......... 13,111,530
September 15, 2010...... 13,111,530
October 15, 2010........ 12,126,447
</Table>
<Table>
<Caption>
PAYMENT DATE GROSS
OCCURRING IN REVENUES ($)
------------ ------------
July 15, 2011........... 12,126,447
August 15, 2011......... 13,111,530
September 15, 2011...... 13,111,530
October 15, 2011........ 12,126,447
November 15, 2011....... 12,454,808
December 15, 2011....... 12,783,169
January 15, 2012........ 12,783,169
February 15, 2012....... 12,783,169
March 15, 2012.......... 12,783,169
April 15, 2012.......... 12,783,169
May 15, 2012............ 12,783,169
June 15, 2012........... 12,783,169
July 15, 2012........... 12,783,169
August 15, 2012......... 12,783,169
September 15, 2012...... 12,783,169
October 15, 2012........ 12,783,169
November 15, 2012....... 12,783,169
December 15, 2012....... 12,789,284
January 15, 2013........ 12,789,284
February 15, 2013....... 12,789,284
March 15, 2013.......... 12,789,284
April 15, 2013.......... 12,774,514
May 15, 2013............ 12,774,514
June 15, 2013........... 12,741,193
July 15, 2013........... 12,741,193
August 15, 2013......... 12,741,193
September 15, 2013...... 12,741,193
October 15, 2013........ 12,741,193
November 15, 2013....... 12,695,956
December 15, 2013....... 12,695,956
January 15, 2014........ 12,650,538
February 15, 2014....... 12,650,538
March 15, 2014.......... 12,650,538
April 15, 2014.......... 12,650,538
May 15, 2014............ 12,650,538
June 15, 2014........... 12,650,538
July 15, 2014........... 12,650,538
August 15, 2014......... 12,614,674
September 15, 2014...... 12,614,674
October 15, 2014........ 12,614,674
November 15, 2014....... 12,614,674
December 15, 2014....... 12,614,674
January 15, 2015........ 12,567,698
February 15, 2015....... 12,567,698
March 15, 2015.......... 12,567,698
April 15, 2015.......... 12,567,698
May 15, 2015............ 12,540,880
June 15, 2015........... 12,540,880
July 15, 2015........... 12,540,880
August 15, 2015......... 12,540,880
September 15, 2015...... 12,540,880
October 15, 2015........ 12,540,880
</Table>
1
<Page>
<Table>
<Caption>
PAYMENT DATE GROSS
OCCURRING IN REVENUES ($)
------------ ------------
November 15, 2005....... 13,035,977
December 15, 2005....... 13,051,116
January 15, 2006........ 12,066,033
February 15, 2006....... 13,051,616
March 15, 2006.......... 13,051,616
April 15, 2006.......... 12,066,533
May 15, 2006............ 13,051,616
June 15, 2006........... 13,051,616
July 15, 2016........... 12,458,571
August 15, 2016......... 12,458,571
September 15, 2016...... 12,458,571
October 15, 2016........ 12,458,571
November 15, 2016....... 12,458,571
December 15, 2016....... 12,311,085
January 15, 2017........ 12,311,085
February 15, 2017....... 12,311,085
March 15, 2017.......... 12,311,085
April 15, 2017.......... 12,311,085
May 15, 2017............ 12,311,085
June 15, 2017........... 12,311,085
July 15, 2017........... 12,311,085
August 15, 2017......... 12,311,085
September 15, 2017...... 12,023,352
October 15, 2017........ 12,023,352
November 15, 2017....... 11,736,989
December 15, 2017....... 11,736,989
January 15, 2018........ 11,736,989
February 15, 2018....... 11,736,989
March 15, 2018.......... 11,736,989
April 15, 2018.......... 11,496,818
May 15, 2018............ 11,496,818
June 15, 2018........... 11,496,818
July 15, 2018........... 11,496,818
August 15, 2018......... 11,496,818
September 15, 2018...... 11,496,818
October 15, 2018........ 11,453,572
November 15, 2018....... 11,453,572
December 15, 2018....... 11,453,572
January 15, 2019........ 11,453,572
February 15, 2019....... 11,453,572
March 15, 2019.......... 11,453,572
April 15, 2019.......... 11,453,572
May 15, 2019............ 11,453,572
June 15, 2019........... 11,453,572
July 15, 2019........... 11,453,572
August 15, 2019......... 11,227,694
September 15, 2019...... 11,055,142
October 15, 2019........ 10,852,505
November 15, 2019....... 10,852,505
December 15, 2019....... 10,852,505
January 15, 2020........ 10,852,505
February 15, 2020....... 10,852,505
March 15, 2020.......... 10,852,505
April 15, 2020.......... 10,706,581
May 15, 2020............ 10,380,086
</Table>
<Table>
<Caption>
PAYMENT DATE GROSS
OCCURRING IN REVENUES ($)
------------ ------------
November 15, 2010....... 13,111,530
December 15, 2010....... 13,111,530
January 15, 2011........ 12,126,447
February 15, 2011....... 13,111,530
March 15, 2011.......... 13,111,530
April 15, 2011.......... 12,126,447
May 15, 2011............ 13,111,530
June 15, 2011........... 13,111,530
July 15, 2021........... 10,043,588
August 15, 2021......... 10,043,588
September 15, 2021...... 10,043,588
October 15, 2021........ 10,043,588
November 15, 2021....... 10,043,588
December 15, 2021....... 10,043,588
January 15, 2022........ 10,004,096
February 15, 2022....... 10,004,096
March 15, 2022.......... 10,004,096
April 15, 2022.......... 10,004,096
May 15, 2022............ 10,004,096
June 15, 2022........... 10,004,096
July 15, 2022........... 10,004,096
August 15, 2022......... 10,004,096
September 15, 2022...... 10,004,096
October 15, 2022........ 9,521,716
November 15, 2022....... 9,521,716
December 15, 2022....... 9,471,843
January 15, 2023........ 9,471,843
February 15, 2023....... 9,457,868
March 15, 2023.......... 9,281,974
April 15, 2023.......... 9,281,974
May 15, 2023............ 9,170,599
June 15, 2023........... 9,170,599
July 15, 2023........... 9,170,599
August 15, 2023......... 9,170,599
September 15, 2023...... 9,016,796
October 15, 2023........ 9,016,796
November 15, 2023....... 9,016,796
December 15, 2023....... 9,016,796
January 15, 2024........ 9,016,796
February 15, 2024....... 9,016,796
March 15, 2024.......... 9,016,796
April 15, 2024.......... 9,016,796
May 15, 2024............ 9,016,796
June 15, 2024........... 9,016,796
July 15, 2024........... 9,016,796
August 15, 2024......... 9,016,796
September 15, 2024...... 9,016,796
October 15, 2024........ 8,652,737
November 15, 2024....... 8,652,737
December 15, 2024....... 8,652,737
January 15, 2025........ 8,652,737
February 15, 2025....... 8,652,737
March 15, 2025.......... 8,652,737
April 15, 2025.......... 8,652,737
May 15, 2025............ 8,626,229
</Table>
<Table>
<Caption>
PAYMENT DATE GROSS
OCCURRING IN REVENUES ($)
------------ ------------
November 15, 2015....... 12,540,880
December 15, 2015....... 12,540,880
January 15, 2016........ 12,535,516
February 15, 2016....... 12,526,389
March 15, 2016.......... 12,526,389
April 15, 2016.......... 12,526,389
May 15, 2016............ 12,496,877
June 15, 2016........... 12,496,877
July 15, 2026........... 8,626,229
August 15, 2026......... 8,626,229
September 15, 2026...... 8,626,229
October 15, 2026........ 8,626,229
November 15, 2026....... 8,602,223
December 15, 2026....... 8,578,920
January 15, 2027........ 8,406,183
February 15, 2027....... 8,350,365
March 15, 2027.......... 8,350,365
April 15, 2027.......... 8,350,365
May 15, 2027............ 8,347,214
June 15, 2027........... 8,327,590
July 15, 2027........... 8,291,049
August 15, 2027......... 8,291,049
September 15, 2027...... 8,291,049
October 15, 2027........ 8,291,049
November 15, 2027....... 8,291,049
December 15, 2027....... 7,811,128
January 15, 2028........ 7,811,128
February 15, 2028....... 7,543,104
March 15, 2028.......... 7,012,056
April 15, 2028.......... 5,716,209
May 15, 2028............ 5,716,209
June 15, 2028........... 5,716,209
July 15, 2028........... 5,716,209
August 15, 2028......... 5,716,209
September 15, 2028...... 5,716,209
October 15, 2028........ 5,716,209
November 15, 2028....... 5,367,242
December 15, 2028....... 5,367,242
January 15, 2029........ 4,695,302
February 15, 2029....... 4,695,302
March 15, 2029.......... 4,695,302
April 15, 2029.......... 4,695,302
May 15, 2029............ 4,426,843
June 15, 2029........... 4,149,994
July 15, 2029........... 4,089,828
August 15, 2029......... 3,932,557
September 15, 2029...... 3,689,557
October 15, 2029........ 3,294,270
November 15, 2029....... 2,746,915
December 15, 2029....... 1,795,701
January 15, 2030........ 1,276,252
February 15, 2030....... 1,276,252
March 15, 2030.......... 957,853
April 15, 2030.......... 957,853
May 15, 2030............ 666,831
</Table>
2
<Page>
<Table>
<Caption>
PAYMENT DATE GROSS
OCCURRING IN REVENUES ($)
------------ ------------
June 15, 2020........... 10,380,086
July 15, 2020........... 10,380,086
August 15, 2020......... 10,380,086
September 15, 2020...... 10,380,086
October 15, 2020........ 10,380,086
November 15, 2020....... 10,233,673
December 15, 2020....... 10,233,673
January 15, 2021........ 10,043,588
February 15, 2021....... 10,043,588
March 15, 2021.......... 10,043,588
April 15, 2021.......... 10,043,588
May 15, 2021............ 10,043,588
June 15, 2021........... 10,043,588
</Table>
<Table>
<Caption>
PAYMENT DATE GROSS
OCCURRING IN REVENUES ($)
------------ ------------
June 15, 2025........... 8,626,229
July 15, 2025........... 8,626,229
August 15, 2025......... 8,626,229
September 15, 2025...... 8,626,229
October 15, 2025........ 8,626,229
November 15, 2025....... 8,626,229
December 15, 2025....... 8,626,229
January 15, 2026........ 8,626,229
February 15, 2026....... 8,626,229
March 15, 2026.......... 8,626,229
April 15, 2026.......... 8,626,229
May 15, 2026............ 8,626,229
June 15, 2026........... 8,626,229
</Table>
<Table>
<Caption>
PAYMENT DATE GROSS
OCCURRING IN REVENUES ($)
------------ ------------
June 15, 2030........... 322,500
July 15, 2030........... --
August 15, 2030......... --
September 15, 2030...... --
October 15, 2030........ --
November 15, 2030....... --
December 15, 2030....... --
January 15, 2031........ --
February 15, 2031....... --
March 15, 2031.......... --
April 15, 2031.......... --
May 15, 2031............ --
June 15, 2031........... --
July 15, 2031........... --
</Table>
3
<Page>
APPENDIX 4
ASSUMED PORTFOLIO VALUES FOR THE INITIAL PORTFOLIO
<Table>
<Caption>
ASSUMED
PAYMENT DATE PORTFOLIO
OCCURRING IN VALUE ($)
------------ -------------
July 15, 2001........... 1,550,391,647
August 15, 2001......... 1,548,366,798
September 15, 2001...... 1,546,331,031
October 15, 2001........ 1,544,284,317
November 15, 2001....... 1,542,226,624
December 15, 2001....... 1,540,157,921
January 15, 2002........ 1,538,078,179
February 15, 2002....... 1,535,987,365
March 15, 2002.......... 1,533,885,450
April 15, 2002.......... 1,531,772,402
May 15, 2002............ 1,529,648,191
June 15, 2002........... 1,527,512,785
July 15, 2002........... 1,525,366,152
August 15, 2002......... 1,523,208,262
September 15, 2002...... 1,521,039,084
October 15, 2002........ 1,518,858,586
November 15, 2002....... 1,516,666,736
December 15, 2002....... 1,514,463,503
January 15, 2003........ 1,512,248,855
February 15, 2003....... 1,510,022,761
March 15, 2003.......... 1,507,785,189
April 15, 2003.......... 1,505,536,106
May 15, 2003............ 1,503,275,482
June 15, 2003........... 1,501,003,284
July 15, 2003........... 1,498,719,480
August 15, 2003......... 1,496,424,038
September 15, 2003...... 1,494,116,926
October 15, 2003........ 1,491,798,111
November 15, 2003....... 1,489,467,561
December 15, 2003....... 1,487,125,244
January 15, 2004........ 1,484,771,127
February 15, 2004....... 1,482,405,177
March 15, 2004.......... 1,480,027,362
April 15, 2004.......... 1,477,637,650
May 15, 2004............ 1,475,236,006
June 15, 2004........... 1,472,822,399
July 15, 2004........... 1,470,396,796
August 15, 2004......... 1,467,959,162
September 15, 2004...... 1,465,509,466
October 15, 2004........ 1,463,047,675
November 15, 2004....... 1,460,573,753
December 15, 2004....... 1,458,087,670
January 15, 2005........ 1,455,589,390
February 15, 2005....... 1,453,078,881
March 15, 2005.......... 1,450,556,109
April 15, 2005.......... 1,448,021,040
</Table>
<Table>
<Caption>
ASSUMED
PAYMENT DATE PORTFOLIO
OCCURRING IN VALUE ($)
------------ -------------
July 15, 2006........... 1,408,496,274
August 15, 2006......... 1,405,759,816
September 15, 2006...... 1,403,010,477
October 15, 2006........ 1,400,248,222
November 15, 2006....... 1,397,473,016
December 15, 2006....... 1,394,684,823
January 15, 2007........ 1,391,883,609
February 15, 2007....... 1,389,069,337
March 15, 2007.......... 1,386,241,973
April 15, 2007.......... 1,383,401,481
May 15, 2007............ 1,380,547,824
June 15, 2007........... 1,377,680,969
July 15, 2007........... 1,374,800,877
August 15, 2007......... 1,371,907,515
September 15, 2007...... 1,369,000,844
October 15, 2007........ 1,366,080,831
November 15, 2007....... 1,363,147,438
December 15, 2007....... 1,360,200,629
January 15, 2008........ 1,357,240,369
February 15, 2008....... 1,354,266,619
March 15, 2008.......... 1,351,279,345
April 15, 2008.......... 1,348,278,510
May 15, 2008............ 1,345,264,076
June 15, 2008........... 1,342,236,007
July 15, 2008........... 1,339,194,266
August 15, 2008......... 1,336,138,817
September 15, 2008...... 1,333,069,623
October 15, 2008........ 1,329,986,645
November 15, 2008....... 1,326,889,848
December 15, 2008....... 1,323,779,194
January 15, 2009........ 1,320,654,645
February 15, 2009....... 1,317,516,165
March 15, 2009.......... 1,314,363,715
April 15, 2009.......... 1,311,197,259
May 15, 2009............ 1,308,016,758
June 15, 2009........... 1,304,822,174
July 15, 2009........... 1,301,613,471
August 15, 2009......... 1,298,390,609
September 15, 2009...... 1,295,153,552
October 15, 2009........ 1,291,902,260
November 15, 2009....... 1,288,636,696
December 15, 2009....... 1,285,356,821
January 15, 2010........ 1,282,062,597
February 15, 2010....... 1,278,753,986
March 15, 2010.......... 1,275,430,949
April 15, 2010.......... 1,272,093,447
</Table>
<Table>
<Caption>
ASSUMED
PAYMENT DATE PORTFOLIO
OCCURRING IN VALUE ($)
------------ -------------
July 15, 2011........... 1,220,268,627
August 15, 2011......... 1,216,694,366
September 15, 2011...... 1,213,104,969
October 15, 2011........ 1,209,500,398
November 15, 2011....... 1,205,880,611
December 15, 2011....... 1,202,245,568
January 15, 2012........ 1,198,595,228
February 15, 2012....... 1,194,929,552
March 15, 2012.......... 1,191,248,498
April 15, 2012.......... 1,187,552,025
May 15, 2012............ 1,183,840,092
June 15, 2012........... 1,180,112,660
July 15, 2012........... 1,176,369,686
August 15, 2012......... 1,172,611,129
September 15, 2012...... 1,168,836,948
October 15, 2012........ 1,165,047,102
November 15, 2012....... 1,161,241,549
December 15, 2012....... 1,157,420,248
January 15, 2013........ 1,153,583,157
February 15, 2013....... 1,149,730,234
March 15, 2013.......... 1,145,861,438
April 15, 2013.......... 1,141,976,727
May 15, 2013............ 1,138,076,058
June 15, 2013........... 1,134,159,389
July 15, 2013........... 1,130,226,679
August 15, 2013......... 1,126,277,885
September 15, 2013...... 1,122,312,964
October 15, 2013........ 1,118,331,874
November 15, 2013....... 1,114,334,573
December 15, 2013....... 1,110,321,017
January 15, 2014........ 1,106,291,165
February 15, 2014....... 1,102,244,972
March 15, 2014.......... 1,098,182,397
April 15, 2014.......... 1,094,103,396
May 15, 2014............ 1,090,007,925
June 15, 2014........... 1,085,895,943
July 15, 2014........... 1,081,767,404
August 15, 2014......... 1,077,622,266
September 15, 2014...... 1,073,460,485
October 15, 2014........ 1,069,282,018
November 15, 2014....... 1,065,086,821
December 15, 2014....... 1,060,874,849
January 15, 2015........ 1,056,646,060
February 15, 2015....... 1,052,400,408
March 15, 2015.......... 1,048,137,850
April 15, 2015.......... 1,043,858,341
</Table>
1
<Page>
<Table>
<Caption>
ASSUMED
PAYMENT DATE PORTFOLIO
OCCURRING IN VALUE ($)
------------ -------------
May 15, 2005............ 1,445,473,641
June 15, 2005........... 1,442,913,877
July 15, 2005........... 1,440,341,716
August 15, 2005......... 1,437,757,122
September 15, 2005...... 1,435,160,062
October 15, 2005........ 1,432,550,501
November 15, 2005....... 1,429,928,406
December 15, 2005....... 1,427,293,743
January 15, 2006........ 1,424,646,476
February 15, 2006....... 1,421,986,571
March 15, 2006.......... 1,419,313,995
April 15, 2006.......... 1,416,628,711
May 15, 2006............ 1,413,930,686
June 15, 2006........... 1,411,219,885
July 15, 2016........... 977,601,234
August 15, 2016......... 973,044,414
September 15, 2016...... 968,469,876
October 15, 2016........ 963,877,572
November 15, 2016....... 959,267,458
December 15, 2016....... 950,659,180
January 15, 2017........ 946,108,959
February 15, 2017....... 941,541,115
March 15, 2017.......... 936,955,602
April 15, 2017.......... 932,352,374
May 15, 2017............ 927,731,385
June 15, 2017........... 923,092,589
July 15, 2017........... 918,435,939
August 15, 2017......... 913,761,390
September 15, 2017...... 901,467,306
October 15, 2017........ 896,939,498
November 15, 2017....... 884,473,833
December 15, 2017....... 880,101,492
January 15, 2018........ 875,712,296
February 15, 2018....... 871,306,202
March 15, 2018.......... 866,883,164
April 15, 2018.......... 858,202,459
May 15, 2018............ 853,847,315
June 15, 2018........... 849,475,445
July 15, 2018........... 845,086,804
August 15, 2018......... 840,681,350
September 15, 2018...... 836,259,039
October 15, 2018........ 831,819,827
November 15, 2018....... 827,363,671
December 15, 2018....... 822,890,526
January 15, 2019........ 818,400,349
February 15, 2019....... 813,893,096
March 15, 2019.......... 809,368,722
April 15, 2019.......... 804,827,183
May 15, 2019............ 800,268,435
June 15, 2019........... 795,692,433
July 15, 2019........... 791,099,133
August 15, 2019......... 781,562,236
September 15, 2019...... 772,917,883
October 15, 2019........ 763,697,727
November 15, 2019....... 759,368,868
</Table>
<Table>
<Caption>
ASSUMED
PAYMENT DATE PORTFOLIO
OCCURRING IN VALUE ($)
------------ -------------
May 15, 2010............ 1,268,741,442
June 15, 2010........... 1,265,374,894
July 15, 2010........... 1,261,993,766
August 15, 2010......... 1,258,598,018
September 15, 2010...... 1,255,187,610
October 15, 2010........ 1,251,762,504
November 15, 2010....... 1,248,322,661
December 15, 2010....... 1,244,868,041
January 15, 2011........ 1,241,398,605
February 15, 2011....... 1,237,914,313
March 15, 2011.......... 1,234,415,126
April 15, 2011.......... 1,230,901,003
May 15, 2011............ 1,227,371,906
June 15, 2011........... 1,223,827,794
July 15, 2021........... 657,115,292
August 15, 2021......... 652,844,718
September 15, 2021...... 648,558,245
October 15, 2021........ 644,255,833
November 15, 2021....... 639,937,439
December 15, 2021....... 635,603,025
January 15, 2022........ 631,252,547
February 15, 2022....... 626,885,965
March 15, 2022.......... 622,503,238
April 15, 2022.......... 618,104,324
May 15, 2022............ 613,689,181
June 15, 2022........... 609,257,769
July 15, 2022........... 604,810,045
August 15, 2022......... 600,345,967
September 15, 2022...... 595,865,495
October 15, 2022........ 576,240,840
November 15, 2022....... 572,090,997
December 15, 2022....... 567,925,875
January 15, 2023........ 563,745,434
February 15, 2023....... 559,549,636
March 15, 2023.......... 555,338,440
April 15, 2023.......... 551,111,808
May 15, 2023............ 546,869,700
June 15, 2023........... 542,612,076
July 15, 2023........... 538,338,897
August 15, 2023......... 534,050,122
September 15, 2023...... 525,236,263
October 15, 2023........ 521,024,549
November 15, 2023....... 516,797,490
December 15, 2023....... 512,555,048
January 15, 2024........ 508,297,182
February 15, 2024....... 504,023,854
March 15, 2024.......... 499,735,023
April 15, 2024.......... 495,430,652
May 15, 2024............ 491,110,699
June 15, 2024........... 486,775,125
July 15, 2024........... 482,423,890
August 15, 2024......... 478,056,955
September 15, 2024...... 473,674,279
October 15, 2024........ 456,552,173
November 15, 2024....... 452,443,668
</Table>
<Table>
<Caption>
ASSUMED
PAYMENT DATE PORTFOLIO
OCCURRING IN VALUE ($)
------------ -------------
May 15, 2015............ 1,039,561,837
June 15, 2015........... 1,035,248,294
July 15, 2015........... 1,030,917,667
August 15, 2015......... 1,026,569,912
September 15, 2015...... 1,022,204,983
October 15, 2015........ 1,017,822,835
November 15, 2015....... 1,013,423,425
December 15, 2015....... 1,009,006,706
January 15, 2016........ 1,004,572,634
February 15, 2016....... 1,000,121,163
March 15, 2016.......... 995,652,247
April 15, 2016.......... 991,165,843
May 15, 2016............ 986,661,903
June 15, 2016........... 982,140,382
July 15, 2026........... 367,111,423
August 15, 2026......... 362,683,736
September 15, 2026...... 358,240,422
October 15, 2026........ 353,781,442
November 15, 2026....... 349,306,756
December 15, 2026....... 344,816,324
January 15, 2027........ 340,310,107
February 15, 2027....... 335,788,064
March 15, 2027.......... 331,250,157
April 15, 2027.......... 326,696,344
May 15, 2027............ 322,126,585
June 15, 2027........... 317,540,840
July 15, 2027........... 312,939,070
August 15, 2027......... 308,321,233
September 15, 2027...... 303,687,288
October 15, 2027........ 299,037,197
November 15, 2027....... 294,370,916
December 15, 2027....... 279,221,654
January 15, 2028........ 274,774,410
February 15, 2028....... 264,466,284
March 15, 2028.......... 248,546,785
April 15, 2028.......... 212,565,390
May 15, 2028............ 209,243,606
June 15, 2028........... 205,910,270
July 15, 2028........... 202,565,352
August 15, 2028......... 199,208,824
September 15, 2028...... 195,840,656
October 15, 2028........ 192,460,820
November 15, 2028....... 189,069,285
December 15, 2028....... 185,666,022
January 15, 2029........ 168,635,360
February 15, 2029....... 165,535,761
March 15, 2029.......... 162,425,464
April 15, 2029.......... 159,304,442
May 15, 2029............ 148,474,875
June 15, 2029........... 137,824,404
July 15, 2029........... 135,041,542
August 15, 2029......... 126,125,009
September 15, 2029...... 117,301,015
October 15, 2029........ 99,397,925
November 15, 2029....... 83,394,130
</Table>
2
<Page>
<Table>
<Caption>
ASSUMED
PAYMENT DATE PORTFOLIO
OCCURRING IN VALUE ($)
------------ -------------
December 15, 2019....... 755,023,627
January 15, 2020........ 750,661,962
February 15, 2020....... 746,283,830
March 15, 2020.......... 741,889,189
April 15, 2020.......... 733,381,517
May 15, 2020............ 724,983,476
June 15, 2020........... 720,735,611
July 15, 2020........... 716,471,737
August 15, 2020......... 712,191,813
September 15, 2020...... 707,895,798
October 15, 2020........ 703,583,649
November 15, 2020....... 695,186,892
December 15, 2020....... 690,940,124
January 15, 2021........ 682,407,138
February 15, 2021....... 678,231,104
March 15, 2021.......... 674,039,414
April 15, 2021.......... 669,832,028
May 15, 2021............ 665,608,907
June 15, 2021........... 661,370,008
</Table>
<Table>
<Caption>
ASSUMED
PAYMENT DATE PORTFOLIO
OCCURRING IN VALUE ($)
------------ -------------
December 15, 2024....... 448,320,346
January 15, 2025........ 444,182,170
February 15, 2025....... 440,029,102
March 15, 2025.......... 435,861,105
April 15, 2025.......... 431,678,139
May 15, 2025............ 427,480,168
June 15, 2025........... 423,267,152
July 15, 2025........... 419,039,055
August 15, 2025......... 414,795,836
September 15, 2025...... 410,537,459
October 15, 2025........ 406,263,883
November 15, 2025....... 401,975,072
December 15, 2025....... 397,670,986
January 15, 2026........ 393,351,587
February 15, 2026....... 389,016,835
March 15, 2026.......... 384,666,691
April 15, 2026.......... 380,301,117
May 15, 2026............ 375,920,074
June 15, 2026........... 371,523,522
</Table>
<Table>
<Caption>
ASSUMED
PAYMENT DATE PORTFOLIO
OCCURRING IN VALUE ($)
------------ -------------
December 15, 2029....... 51,798,531
January 15, 2030........ 35,375,741
February 15, 2030....... 34,619,608
March 15, 2030.......... 25,898,320
April 15, 2030.......... 25,328,347
May 15, 2030............ 24,756,422
June 15, 2030........... 8,258,279
July 15, 2030........... --
August 15, 2030......... --
September 15, 2030...... --
October 15, 2030........ --
November 15, 2030....... --
December 15, 2030....... --
January 15, 2031........ --
February 15, 2031....... --
March 15, 2031.......... --
April 15, 2031.......... --
May 15, 2031............ --
June 15, 2031........... --
July 15, 2031........... --
</Table>
3
<Page>
APPENDIX 5
The "Class Percentages" contained in the following Appendix 5 represent
percentages to be incorporated into the mathematical formulas found on pages
107-109 under "Description of the Notes--Payments on the Notes--Principal
Amortization" in the text. Those formulas are used in calculating principal
payments on the monthly payment dates for the notes.
1
<Page>
APPENDIX 5
CLASS A CLASS PERCENTAGES
<Table>
<Caption>
CLASS A CLASS A
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
Closing Date......... 69.933% 69.933%
July 15, 2001........ 69.642% 69.627%
August 15, 2001...... 69.539% 69.510%
September 15, 2001... 69.362% 69.317%
October 15, 2001..... 69.309% 69.251%
November 15, 2001.... 69.219% 69.146%
December 15, 2001.... 69.055% 68.966%
January 15, 2002..... 69.013% 68.911%
February 15, 2002.... 68.920% 68.804%
March 15, 2002....... 68.747% 68.615%
April 15, 2002....... 68.696% 68.550%
May 15, 2002......... 68.581% 68.420%
June 15, 2002........ 68.392% 68.213%
July 15, 2002........ 68.351% 68.158%
August 15, 2002...... 68.269% 68.059%
September 15, 2002... 68.122% 67.893%
October 15, 2002..... 68.084% 67.840%
November 15, 2002.... 68.010% 67.750%
December 15, 2002.... 67.871% 67.592%
January 15, 2003..... 67.838% 67.545%
February 15, 2003.... 67.769% 67.458%
March 15, 2003....... 67.639% 67.311%
April 15, 2003....... 67.591% 67.246%
May 15, 2003......... 67.491% 67.129%
June 15, 2003........ 67.350% 66.968%
July 15, 2003........ 67.390% 66.995%
August 15, 2003...... 67.294% 66.877%
September 15, 2003... 67.183% 66.743%
October 15, 2003..... 67.117% 66.657%
November 15, 2003.... 67.015% 66.533%
December 15, 2003.... 66.911% 66.406%
January 15, 2004..... 66.849% 66.324%
February 15, 2004.... 66.745% 66.196%
March 15, 2004....... 66.636% 66.065%
April 15, 2004....... 66.572% 65.979%
May 15, 2004......... 66.455% 65.839%
June 15, 2004........ 66.339% 65.698%
July 15, 2004........ 66.330% 65.668%
August 15, 2004...... 66.219% 65.526%
September 15, 2004... 66.106% 65.382%
October 15, 2004..... 66.033% 65.282%
November 15, 2004.... 65.925% 65.143%
December 15, 2004.... 65.815% 65.001%
January 15, 2005..... 65.747% 64.906%
February 15, 2005.... 65.637% 64.763%
March 15, 2005....... 65.521% 64.616%
April 15, 2005....... 65.458% 64.525%
May 15, 2005......... 65.336% 64.370%
June 15, 2005........ 65.215% 64.215%
</Table>
<Table>
<Caption>
CLASS A CLASS A
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
June 15, 2006........ 63.914% 62.444%
July 15, 2006........ 63.826% 62.318%
August 15, 2006...... 63.695% 62.145%
September 15, 2006... 63.563% 61.970%
October 15, 2006..... 63.472% 61.840%
November 15, 2006.... 63.337% 61.662%
December 15, 2006.... 63.200% 61.481%
January 15, 2007..... 63.106% 61.348%
February 15, 2007.... 62.968% 61.165%
March 15, 2007....... 62.824% 60.976%
April 15, 2007....... 62.727% 60.838%
May 15, 2007......... 62.584% 60.648%
June 15, 2007........ 62.440% 60.458%
July 15, 2007........ 62.342% 60.313%
August 15, 2007...... 62.200% 60.119%
September 15, 2007... 62.056% 59.923%
October 15, 2007..... 61.954% 59.773%
November 15, 2007.... 61.808% 59.574%
December 15, 2007.... 61.658% 59.369%
January 15, 2008..... 61.552% 59.214%
February 15, 2008.... 61.401% 59.006%
March 15, 2008....... 61.244% 58.794%
April 15, 2008....... 61.133% 58.631%
May 15, 2008......... 60.973% 58.415%
June 15, 2008........ 60.814% 58.197%
July 15, 2008........ 60.701% 58.027%
August 15, 2008...... 60.543% 57.805%
September 15, 2008... 60.384% 57.581%
October 15, 2008..... 60.267% 57.404%
November 15, 2008.... 60.104% 57.175%
December 15, 2008.... 59.939% 56.943%
January 15, 2009..... 59.818% 56.761%
February 15, 2009.... 59.651% 56.525%
March 15, 2009....... 59.478% 56.284%
April 15, 2009....... 59.352% 56.095%
May 15, 2009......... 59.178% 55.851%
June 15, 2009........ 59.004% 55.605%
July 15, 2009........ 58.878% 55.407%
August 15, 2009...... 58.707% 55.157%
September 15, 2009... 58.535% 54.904%
October 15, 2009..... 58.404% 54.698%
November 15, 2009.... 58.229% 54.441%
December 15, 2009.... 58.050% 54.178%
January 15, 2010..... 57.917% 53.968%
February 15, 2010.... 57.737% 53.703%
March 15, 2010....... 57.545% 53.426%
April 15, 2010....... 57.407% 53.208%
May 15, 2010......... 57.218% 52.932%
June 15, 2010........ 57.031% 52.656%
</Table>
<Table>
<Caption>
CLASS A CLASS A
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
June 15, 2011........ 54.900% 49.296%
July 15, 2011........ 54.745% 49.029%
August 15, 2011...... 54.549% 48.711%
September 15, 2011... 54.351% 48.388%
October 15, 2011..... 54.189% 48.110%
November 15, 2011.... 54.017% 47.818%
December 15, 2011.... 53.820% 47.495%
January 15, 2012..... 53.628% 47.177%
February 15, 2012.... 53.434% 46.854%
March 15, 2012....... 53.223% 46.513%
April 15, 2012....... 53.024% 46.182%
May 15, 2012......... 52.815% 45.839%
June 15, 2012........ 52.610% 45.500%
July 15, 2012........ 52.401% 45.149%
August 15, 2012...... 52.195% 44.801%
September 15, 2012... 51.987% 44.449%
October 15, 2012..... 51.770% 44.085%
November 15, 2012.... 51.556% 43.723%
December 15, 2012.... 51.333% 43.350%
January 15, 2013..... 51.114% 42.979%
February 15, 2013.... 50.891% 42.603%
March 15, 2013....... 50.646% 42.202%
April 15, 2013....... 50.419% 41.816%
May 15, 2013......... 50.181% 41.420%
June 15, 2013........ 49.949% 41.026%
July 15, 2013........ 49.712% 40.621%
August 15, 2013...... 49.479% 40.217%
September 15, 2013... 49.242% 39.808%
October 15, 2013..... 48.996% 39.387%
November 15, 2013.... 48.755% 38.969%
December 15, 2013.... 48.504% 38.540%
January 15, 2014..... 48.259% 38.114%
February 15, 2014.... 48.010% 37.682%
March 15, 2014....... 47.740% 37.227%
April 15, 2014....... 47.484% 36.783%
May 15, 2014......... 47.218% 36.328%
June 15, 2014........ 46.955% 35.872%
July 15, 2014........ 46.688% 35.404%
August 15, 2014...... 46.425% 34.937%
September 15, 2014... 46.158% 34.464%
October 15, 2014..... 45.881% 33.980%
November 15, 2014.... 45.606% 33.493%
December 15, 2014.... 45.322% 32.995%
January 15, 2015..... 45.041% 32.498%
February 15, 2015.... 44.757% 31.994%
March 15, 2015....... 44.451% 31.468%
April 15, 2015....... 44.158% 30.949%
May 15, 2015......... 43.857% 30.420%
June 15, 2015........ 43.556% 29.888%
</Table>
2
<Page>
<Table>
<Caption>
CLASS A CLASS A
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
July 15, 2005........ 65.138% 64.105%
August 15, 2005...... 65.020% 63.947%
September 15, 2005... 64.901% 63.788%
October 15, 2005..... 64.821% 63.673%
November 15, 2005.... 64.702% 63.514%
December 15, 2005.... 64.580% 63.352%
January 15, 2006..... 64.501% 63.236%
February 15, 2006.... 64.378% 63.072%
March 15, 2006....... 64.250% 62.903%
April 15, 2006....... 64.168% 62.783%
May 15, 2006......... 64.041% 62.614%
June 15, 2016........ 39.870% 22.847%
July 15, 2016........ 39.567% 22.205%
August 15, 2016...... 39.263% 21.557%
September 15, 2016... 38.955% 20.898%
October 15, 2016..... 38.637% 20.227%
November 15, 2016.... 38.319% 19.548%
December 15, 2016.... 38.157% 18.945%
January 15, 2017..... 37.832% 18.252%
February 15, 2017.... 37.501% 17.547%
March 15, 2017....... 37.151% 16.823%
April 15, 2017....... 36.809% 16.097%
May 15, 2017......... 36.457% 15.356%
June 15, 2017........ 36.103% 14.606%
July 15, 2017........ 35.785% 13.841%
August 15, 2017...... 35.465% 13.067%
September 15, 2017... 35.452% 12.405%
October 15, 2017..... 35.124% 11.617%
November 15, 2017.... 35.122% 10.938%
December 15, 2017.... 34.790% 10.138%
January 15, 2018..... 34.456% 9.327%
February 15, 2018.... 34.116% 8.504%
March 15, 2018....... 33.760% 7.663%
April 15, 2018....... 33.587% 6.866%
May 15, 2018......... 33.238% 6.021%
June 15, 2018........ 32.903% 5.186%
July 15, 2018........ 32.602% 4.343%
August 15, 2018...... 32.299% 3.488%
September 15, 2018... 31.991% 2.618%
October 15, 2018..... 31.676% 1.737%
November 15, 2018.... 31.359% 0.843%
December 15, 2018.... 31.034% 0.000%
January 15, 2019..... 30.705% 0.000%
February 15, 2019.... 30.371% 0.000%
March 15, 2019....... 30.021% 0.000%
April 15, 2019....... 29.675% 0.000%
May 15, 2019......... 29.318% 0.000%
June 15, 2019........ 28.959% 0.000%
July 15, 2019........ 28.589% 0.000%
August 15, 2019...... 28.407% 0.000%
September 15, 2019... 28.194% 0.000%
October 15, 2019..... 28.003% 0.000%
November 15, 2019.... 27.629% 0.000%
December 15, 2019.... 27.245% 0.000%
</Table>
<Table>
<Caption>
CLASS A CLASS A
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
July 15, 2010........ 56.892% 52.426%
August 15, 2010...... 56.711% 52.145%
September 15, 2010... 56.528% 51.861%
October 15, 2010..... 56.384% 51.623%
November 15, 2010.... 56.198% 51.333%
December 15, 2010.... 56.004% 51.035%
January 15, 2011..... 55.860% 50.793%
February 15, 2011.... 55.668% 50.495%
March 15, 2011....... 55.455% 50.173%
April 15, 2011....... 55.305% 49.923%
May 15, 2011......... 55.100% 49.608%
June 15, 2021........ 19.969% 0.000%
July 15, 2021........ 19.460% 0.000%
August 15, 2021...... 18.944% 0.000%
September 15, 2021... 18.417% 0.000%
October 15, 2021..... 17.878% 0.000%
November 15, 2021.... 17.329% 0.000%
December 15, 2021.... 16.767% 0.000%
January 15, 2022..... 16.199% 0.000%
February 15, 2022.... 15.618% 0.000%
March 15, 2022....... 15.021% 0.000%
April 15, 2022....... 14.415% 0.000%
May 15, 2022......... 13.795% 0.000%
June 15, 2022........ 13.163% 0.000%
July 15, 2022........ 12.515% 0.000%
August 15, 2022...... 11.855% 0.000%
September 15, 2022... 11.180% 0.000%
October 15, 2022..... 10.805% 0.000%
November 15, 2022.... 10.119% 0.000%
December 15, 2022.... 9.420% 0.000%
January 15, 2023..... 8.708% 0.000%
February 15, 2023.... 7.980% 0.000%
March 15, 2023....... 7.250% 0.000%
April 15, 2023....... 6.505% 0.000%
May 15, 2023......... 5.753% 0.000%
June 15, 2023........ 4.984% 0.000%
July 15, 2023........ 4.196% 0.000%
August 15, 2023...... 3.389% 0.000%
September 15, 2023... 2.600% 0.000%
October 15, 2023..... 1.761% 0.000%
November 15, 2023.... 0.900% 0.000%
December 15, 2023.... 0.016% 0.000%
January 15, 2024..... 0.000% 0.000%
February 15, 2024.... 0.000% 0.000%
March 15, 2024....... 0.000% 0.000%
April 15, 2024....... 0.000% 0.000%
May 15, 2024......... 0.000% 0.000%
June 15, 2024........ 0.000% 0.000%
July 15, 2024........ 0.000% 0.000%
August 15, 2024...... 0.000% 0.000%
September 15, 2024... 0.000% 0.000%
October 15, 2024..... 0.000% 0.000%
November 15, 2024.... 0.000% 0.000%
December 15, 2024.... 0.000% 0.000%
</Table>
<Table>
<Caption>
CLASS A CLASS A
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
July 15, 2015........ 43.271% 29.344%
August 15, 2015...... 42.986% 28.797%
September 15, 2015... 42.697% 28.241%
October 15, 2015..... 42.398% 27.673%
November 15, 2015.... 42.101% 27.102%
December 15, 2015.... 41.793% 26.517%
January 15, 2016..... 41.486% 25.929%
February 15, 2016.... 41.175% 25.332%
March 15, 2016....... 40.849% 24.718%
April 15, 2016....... 40.529% 24.104%
May 15, 2016......... 40.199% 23.478%
July 15, 2026........ 0.000% 0.000%
August 15, 2026...... 0.000% 0.000%
September 15, 2026... 0.000% 0.000%
October 15, 2026..... 0.000% 0.000%
November 15, 2026.... 0.000% 0.000%
December 15, 2026.... 0.000% 0.000%
January 15, 2027..... 0.000% 0.000%
February 15, 2027.... 0.000% 0.000%
March 15, 2027....... 0.000% 0.000%
April 15, 2027....... 0.000% 0.000%
May 15, 2027......... 0.000% 0.000%
June 15, 2027........ 0.000% 0.000%
July 15, 2027........ 0.000% 0.000%
August 15, 2027...... 0.000% 0.000%
September 15, 2027... 0.000% 0.000%
October 15, 2027..... 0.000% 0.000%
November 15, 2027.... 0.000% 0.000%
December 15, 2027.... 0.000% 0.000%
January 15, 2028..... 0.000% 0.000%
February 15, 2028.... 0.000% 0.000%
March 15, 2028....... 0.000% 0.000%
April 15, 2028....... 0.000% 0.000%
May 15, 2028......... 0.000% 0.000%
June 15, 2028........ 0.000% 0.000%
July 15, 2028........ 0.000% 0.000%
August 15, 2028...... 0.000% 0.000%
September 15, 2028... 0.000% 0.000%
October 15, 2028..... 0.000% 0.000%
November 15, 2028.... 0.000% 0.000%
December 15, 2028.... 0.000% 0.000%
January 15, 2029..... 0.000% 0.000%
February 15, 2029.... 0.000% 0.000%
March 15, 2029....... 0.000% 0.000%
April 15, 2029....... 0.000% 0.000%
May 15, 2029......... 0.000% 0.000%
June 15, 2029........ 0.000% 0.000%
July 15, 2029........ 0.000% 0.000%
August 15, 2029...... 0.000% 0.000%
September 15, 2029... 0.000% 0.000%
October 15, 2029..... 0.000% 0.000%
November 15, 2029.... 0.000% 0.000%
December 15, 2029.... 0.000% 0.000%
January 15, 2030..... 0.000% 0.000%
</Table>
3
<Page>
<Table>
<Caption>
CLASS A CLASS A
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
January 15, 2020..... 26.856% 0.000%
February 15, 2020.... 26.460% 0.000%
March 15, 2020....... 26.052% 0.000%
April 15, 2020....... 25.793% 0.000%
May 15, 2020......... 25.539% 0.000%
June 15, 2020........ 25.133% 0.000%
July 15, 2020........ 24.717% 0.000%
August 15, 2020...... 24.296% 0.000%
September 15, 2020... 23.866% 0.000%
October 15, 2020..... 23.426% 0.000%
November 15, 2020.... 23.124% 0.000%
December 15, 2020.... 22.672% 0.000%
January 15, 2021..... 22.366% 0.000%
February 15, 2021.... 21.906% 0.000%
March 15, 2021....... 21.431% 0.000%
April 15, 2021....... 20.954% 0.000%
May 15, 2021......... 20.465% 0.000%
</Table>
<Table>
<Caption>
CLASS A CLASS A
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
January 15, 2025..... 0.000% 0.000%
February 15, 2025.... 0.000% 0.000%
March 15, 2025....... 0.000% 0.000%
April 15, 2025....... 0.000% 0.000%
May 15, 2025......... 0.000% 0.000%
June 15, 2025........ 0.000% 0.000%
July 15, 2025........ 0.000% 0.000%
August 15, 2025...... 0.000% 0.000%
September 15, 2025... 0.000% 0.000%
October 15, 2025..... 0.000% 0.000%
November 15, 2025.... 0.000% 0.000%
December 15, 2025.... 0.000% 0.000%
January 15, 2026..... 0.000% 0.000%
February 15, 2026.... 0.000% 0.000%
March 15, 2026....... 0.000% 0.000%
April 15, 2026....... 0.000% 0.000%
May 15, 2026......... 0.000% 0.000%
June 15, 2026........ 0.000% 0.000%
</Table>
<Table>
<Caption>
CLASS A CLASS A
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
February 15, 2030.... 0.000% 0.000%
March 15, 2030....... 0.000% 0.000%
April 15, 2030....... 0.000% 0.000%
May 15, 2030......... 0.000% 0.000%
June 15, 2030........ 0.000% 0.000%
July 15, 2030........ 0.000% 0.000%
August 15, 2030...... 0.000% 0.000%
September 15, 2030... 0.000% 0.000%
October 15, 2030..... 0.000% 0.000%
November 15, 2030.... 0.000% 0.000%
December 15, 2030.... 0.000% 0.000%
January 15, 2031..... 0.000% 0.000%
February 15, 2031.... 0.000% 0.000%
March 15, 2031....... 0.000% 0.000%
April 15, 2031....... 0.000% 0.000%
May 15, 2031......... 0.000% 0.000%
June 15, 2031........ 0.000% 0.000%
July 15, 2031........ 0.000% 0.000%
</Table>
4
<Page>
CLASS B CLASS PERCENTAGES
<Table>
<Caption>
CLASS B CLASS B
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
Closing Date......... 9.217% 9.217%
July 15, 2001........ 9.178% 9.177%
August 15, 2001...... 9.165% 9.161%
September 15, 2001... 9.141% 9.136%
October 15, 2001..... 9.134% 9.127%
November 15, 2001.... 9.122% 9.113%
December 15, 2001.... 9.101% 9.090%
January 15, 2002..... 9.095% 9.082%
February 15, 2002.... 9.083% 9.068%
March 15, 2002....... 9.060% 9.043%
April 15, 2002....... 9.053% 9.035%
May 15, 2002......... 9.038% 9.018%
June 15, 2002........ 9.013% 8.990%
July 15, 2002........ 9.007% 8.983%
August 15, 2002...... 8.995% 8.970%
September 15, 2002... 8.976% 8.948%
October 15, 2002..... 8.970% 8.941%
November 15, 2002.... 8.960% 8.929%
December 15, 2002.... 8.941% 8.908%
January 15, 2003..... 8.936% 8.902%
February 15, 2003.... 8.927% 8.891%
March 15, 2003....... 8.909% 8.871%
April 15, 2003....... 8.902% 8.863%
May 15, 2003......... 8.889% 8.847%
June 15, 2003........ 8.870% 8.826%
July 15, 2003........ 8.874% 8.830%
August 15, 2003...... 8.860% 8.814%
September 15, 2003... 8.844% 8.797%
October 15, 2003..... 8.834% 8.785%
November 15, 2003.... 8.819% 8.769%
December 15, 2003.... 8.804% 8.752%
January 15, 2004..... 8.795% 8.741%
February 15, 2004.... 8.780% 8.724%
March 15, 2004....... 8.764% 8.707%
April 15, 2004....... 8.754% 8.696%
May 15, 2004......... 8.737% 8.677%
June 15, 2004........ 8.720% 8.659%
July 15, 2004........ 8.717% 8.655%
August 15, 2004...... 8.698% 8.636%
September 15, 2004... 8.679% 8.617%
October 15, 2004..... 8.665% 8.604%
November 15, 2004.... 8.647% 8.586%
December 15, 2004.... 8.628% 8.567%
January 15, 2005..... 8.616% 8.554%
February 15, 2005.... 8.597% 8.536%
March 15, 2005....... 8.577% 8.516%
April 15, 2005....... 8.565% 8.504%
May 15, 2005......... 8.545% 8.484%
June 15, 2005........ 8.524% 8.463%
July 15, 2005........ 8.510% 8.449%
</Table>
<Table>
<Caption>
CLASS B CLASS B
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
June 15, 2006........ 8.293% 8.230%
July 15, 2006........ 8.277% 8.213%
August 15, 2006...... 8.256% 8.191%
September 15, 2006... 8.234% 8.167%
October 15, 2006..... 8.218% 8.150%
November 15, 2006.... 8.195% 8.127%
December 15, 2006.... 8.173% 8.103%
January 15, 2007..... 8.156% 8.085%
February 15, 2007.... 8.134% 8.061%
March 15, 2007....... 8.110% 8.037%
April 15, 2007....... 8.093% 8.018%
May 15, 2007......... 8.069% 7.993%
June 15, 2007........ 8.046% 7.968%
July 15, 2007........ 8.029% 7.949%
August 15, 2007...... 8.005% 7.924%
September 15, 2007... 7.981% 7.898%
October 15, 2007..... 7.963% 7.878%
November 15, 2007.... 7.939% 7.852%
December 15, 2007.... 7.914% 7.825%
January 15, 2008..... 7.896% 7.804%
February 15, 2008.... 7.871% 7.777%
March 15, 2008....... 7.845% 7.749%
April 15, 2008....... 7.826% 7.727%
May 15, 2008......... 7.799% 7.699%
June 15, 2008........ 7.773% 7.670%
July 15, 2008........ 7.753% 7.648%
August 15, 2008...... 7.726% 7.619%
September 15, 2008... 7.699% 7.589%
October 15, 2008..... 7.678% 7.566%
November 15, 2008.... 7.650% 7.536%
December 15, 2008.... 7.622% 7.505%
January 15, 2009..... 7.601% 7.481%
February 15, 2009.... 7.573% 7.450%
March 15, 2009....... 7.544% 7.418%
April 15, 2009....... 7.522% 7.393%
May 15, 2009......... 7.492% 7.361%
June 15, 2009........ 7.463% 7.329%
July 15, 2009........ 7.439% 7.302%
August 15, 2009...... 7.407% 7.269%
September 15, 2009... 7.376% 7.236%
October 15, 2009..... 7.351% 7.209%
November 15, 2009.... 7.319% 7.175%
December 15, 2009.... 7.286% 7.141%
January 15, 2010..... 7.260% 7.113%
February 15, 2010.... 7.228% 7.078%
March 15, 2010....... 7.193% 7.041%
April 15, 2010....... 7.167% 7.013%
May 15, 2010......... 7.133% 6.976%
June 15, 2010........ 7.099% 6.940%
July 15, 2010........ 7.071% 6.910%
</Table>
<Table>
<Caption>
CLASS B CLASS B
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
June 15, 2011........ 6.691% 6.497%
July 15, 2011........ 6.662% 6.462%
August 15, 2011...... 6.627% 6.420%
September 15, 2011... 6.591% 6.377%
October 15, 2011..... 6.561% 6.341%
November 15, 2011.... 6.530% 6.302%
December 15, 2011.... 6.494% 6.260%
January 15, 2012..... 6.460% 6.218%
February 15, 2012.... 6.425% 6.175%
March 15, 2012....... 6.388% 6.130%
April 15, 2012....... 6.352% 6.087%
May 15, 2012......... 6.315% 6.042%
June 15, 2012........ 6.279% 5.997%
July 15, 2012........ 6.241% 5.951%
August 15, 2012...... 6.204% 5.905%
September 15, 2012... 6.167% 5.858%
October 15, 2012..... 6.128% 5.810%
November 15, 2012.... 6.090% 5.763%
December 15, 2012.... 6.051% 5.713%
January 15, 2013..... 6.012% 5.664%
February 15, 2013.... 5.973% 5.615%
March 15, 2013....... 5.931% 5.562%
April 15, 2013....... 5.891% 5.511%
May 15, 2013......... 5.850% 5.459%
June 15, 2013........ 5.809% 5.407%
July 15, 2013........ 5.768% 5.354%
August 15, 2013...... 5.727% 5.301%
September 15, 2013... 5.686% 5.247%
October 15, 2013..... 5.643% 5.191%
November 15, 2013.... 5.602% 5.136%
December 15, 2013.... 5.559% 5.080%
January 15, 2014..... 5.517% 5.023%
February 15, 2014.... 5.474% 4.966%
March 15, 2014....... 5.428% 4.906%
April 15, 2014....... 5.385% 4.848%
May 15, 2014......... 5.340% 4.788%
June 15, 2014........ 5.296% 4.728%
July 15, 2014........ 5.251% 4.666%
August 15, 2014...... 5.206% 4.605%
September 15, 2014... 5.161% 4.542%
October 15, 2014..... 5.115% 4.478%
November 15, 2014.... 5.069% 4.414%
December 15, 2014.... 5.022% 4.349%
January 15, 2015..... 4.975% 4.283%
February 15, 2015.... 4.929% 4.217%
March 15, 2015....... 4.879% 4.147%
April 15, 2015....... 4.831% 4.079%
May 15, 2015......... 4.782% 4.009%
June 15, 2015........ 4.734% 3.939%
July 15, 2015........ 4.684% 3.867%
</Table>
5
<Page>
<Table>
<Caption>
CLASS B CLASS B
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
August 15, 2005...... 8.489% 8.428%
September 15, 2005... 8.468% 8.407%
October 15, 2005..... 8.453% 8.392%
November 15, 2005.... 8.432% 8.371%
December 15, 2005.... 8.411% 8.350%
January 15, 2006..... 8.396% 8.334%
February 15, 2006.... 8.375% 8.313%
March 15, 2006....... 8.353% 8.290%
April 15, 2006....... 8.337% 8.275%
May 15, 2006......... 8.315% 8.252%
June 15, 2016........ 4.116% 3.011%
July 15, 2016........ 4.060% 2.927%
August 15, 2016...... 4.005% 2.841%
September 15, 2016... 3.949% 2.754%
October 15, 2016..... 3.893% 2.666%
November 15, 2016.... 3.836% 2.576%
December 15, 2016.... 3.796% 2.497%
January 15, 2017..... 3.739% 2.406%
February 15, 2017.... 3.682% 2.313%
March 15, 2017....... 3.623% 2.217%
April 15, 2017....... 3.565% 2.121%
May 15, 2017......... 3.506% 2.024%
June 15, 2017........ 3.447% 1.925%
July 15, 2017........ 3.388% 1.824%
August 15, 2017...... 3.329% 1.722%
September 15, 2017... 3.300% 1.635%
October 15, 2017..... 3.241% 1.531%
November 15, 2017.... 3.213% 1.442%
December 15, 2017.... 3.155% 1.336%
January 15, 2018..... 3.097% 1.229%
February 15, 2018.... 3.039% 1.121%
March 15, 2018....... 2.979% 1.010%
April 15, 2018....... 2.936% 0.905%
May 15, 2018......... 2.879% 0.794%
June 15, 2018........ 2.823% 0.684%
July 15, 2018........ 2.767% 0.572%
August 15, 2018...... 2.711% 0.460%
September 15, 2018... 2.655% 0.345%
October 15, 2018..... 2.599% 0.229%
November 15, 2018.... 2.543% 0.111%
December 15, 2018.... 2.486% 0.000%
January 15, 2019..... 2.430% 0.000%
February 15, 2019.... 2.374% 0.000%
March 15, 2019....... 2.316% 0.000%
April 15, 2019....... 2.259% 0.000%
May 15, 2019......... 2.202% 0.000%
June 15, 2019........ 2.145% 0.000%
July 15, 2019........ 2.088% 0.000%
August 15, 2019...... 2.046% 0.000%
September 15, 2019... 2.002% 0.000%
October 15, 2019..... 1.960% 0.000%
November 15, 2019.... 1.906% 0.000%
December 15, 2019.... 1.851% 0.000%
</Table>
<Table>
<Caption>
CLASS B CLASS B
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
August 15, 2010...... 7.037% 6.873%
September 15, 2010... 7.002% 6.835%
October 15, 2010..... 6.973% 6.804%
November 15, 2010.... 6.937% 6.766%
December 15, 2010.... 6.901% 6.726%
January 15, 2011..... 6.872% 6.694%
February 15, 2011.... 6.836% 6.655%
March 15, 2011....... 6.796% 6.613%
April 15, 2011....... 6.767% 6.580%
May 15, 2011......... 6.729% 6.538%
June 15, 2021........ 0.966% 0.000%
July 15, 2021........ 0.918% 0.000%
August 15, 2021...... 0.871% 0.000%
September 15, 2021... 0.824% 0.000%
October 15, 2021..... 0.778% 0.000%
November 15, 2021.... 0.732% 0.000%
December 15, 2021.... 0.687% 0.000%
January 15, 2022..... 0.643% 0.000%
February 15, 2022.... 0.599% 0.000%
March 15, 2022....... 0.556% 0.000%
April 15, 2022....... 0.514% 0.000%
May 15, 2022......... 0.472% 0.000%
June 15, 2022........ 0.432% 0.000%
July 15, 2022........ 0.392% 0.000%
August 15, 2022...... 0.354% 0.000%
September 15, 2022... 0.316% 0.000%
October 15, 2022..... 0.290% 0.000%
November 15, 2022.... 0.256% 0.000%
December 15, 2022.... 0.224% 0.000%
January 15, 2023..... 0.193% 0.000%
February 15, 2023.... 0.164% 0.000%
March 15, 2023....... 0.136% 0.000%
April 15, 2023....... 0.111% 0.000%
May 15, 2023......... 0.088% 0.000%
June 15, 2023........ 0.067% 0.000%
July 15, 2023........ 0.048% 0.000%
August 15, 2023...... 0.032% 0.000%
September 15, 2023... 0.018% 0.000%
October 15, 2023..... 0.008% 0.000%
November 15, 2023.... 0.001% 0.000%
December 15, 2023.... 0.000% 0.000%
January 15, 2024..... 0.000% 0.000%
February 15, 2024.... 0.000% 0.000%
March 15, 2024....... 0.000% 0.000%
April 15, 2024....... 0.000% 0.000%
May 15, 2024......... 0.000% 0.000%
June 15, 2024........ 0.000% 0.000%
July 15, 2024........ 0.000% 0.000%
August 15, 2024...... 0.000% 0.000%
September 15, 2024... 0.000% 0.000%
October 15, 2024..... 0.000% 0.000%
November 15, 2024.... 0.000% 0.000%
December 15, 2024.... 0.000% 0.000%
</Table>
<Table>
<Caption>
CLASS B CLASS B
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
August 15, 2015...... 4.635% 3.795%
September 15, 2015... 4.585% 3.722%
October 15, 2015..... 4.535% 3.647%
November 15, 2015.... 4.484% 3.572%
December 15, 2015.... 4.432% 3.495%
January 15, 2016..... 4.381% 3.417%
February 15, 2016.... 4.329% 3.339%
March 15, 2016....... 4.275% 3.258%
April 15, 2016....... 4.223% 3.177%
May 15, 2016......... 4.169% 3.094%
July 15, 2026........ 0.000% 0.000%
August 15, 2026...... 0.000% 0.000%
September 15, 2026... 0.000% 0.000%
October 15, 2026..... 0.000% 0.000%
November 15, 2026.... 0.000% 0.000%
December 15, 2026.... 0.000% 0.000%
January 15, 2027..... 0.000% 0.000%
February 15, 2027.... 0.000% 0.000%
March 15, 2027....... 0.000% 0.000%
April 15, 2027....... 0.000% 0.000%
May 15, 2027......... 0.000% 0.000%
June 15, 2027........ 0.000% 0.000%
July 15, 2027........ 0.000% 0.000%
August 15, 2027...... 0.000% 0.000%
September 15, 2027... 0.000% 0.000%
October 15, 2027..... 0.000% 0.000%
November 15, 2027.... 0.000% 0.000%
December 15, 2027.... 0.000% 0.000%
January 15, 2028..... 0.000% 0.000%
February 15, 2028.... 0.000% 0.000%
March 15, 2028....... 0.000% 0.000%
April 15, 2028....... 0.000% 0.000%
May 15, 2028......... 0.000% 0.000%
June 15, 2028........ 0.000% 0.000%
July 15, 2028........ 0.000% 0.000%
August 15, 2028...... 0.000% 0.000%
September 15, 2028... 0.000% 0.000%
October 15, 2028..... 0.000% 0.000%
November 15, 2028.... 0.000% 0.000%
December 15, 2028.... 0.000% 0.000%
January 15, 2029..... 0.000% 0.000%
February 15, 2029.... 0.000% 0.000%
March 15, 2029....... 0.000% 0.000%
April 15, 2029....... 0.000% 0.000%
May 15, 2029......... 0.000% 0.000%
June 15, 2029........ 0.000% 0.000%
July 15, 2029........ 0.000% 0.000%
August 15, 2029...... 0.000% 0.000%
September 15, 2029... 0.000% 0.000%
October 15, 2029..... 0.000% 0.000%
November 15, 2029.... 0.000% 0.000%
December 15, 2029.... 0.000% 0.000%
January 15, 2030..... 0.000% 0.000%
</Table>
6
<Page>
<Table>
<Caption>
CLASS B CLASS B
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
January 15, 2020..... 1.797% 0.000%
February 15, 2020.... 1.743% 0.000%
March 15, 2020....... 1.688% 0.000%
April 15, 2020....... 1.644% 0.000%
May 15, 2020......... 1.601% 0.000%
June 15, 2020........ 1.550% 0.000%
July 15, 2020........ 1.498% 0.000%
August 15, 2020...... 1.446% 0.000%
September 15, 2020... 1.395% 0.000%
October 15, 2020..... 1.344% 0.000%
November 15, 2020.... 1.301% 0.000%
December 15, 2020.... 1.251% 0.000%
January 15, 2021..... 1.209% 0.000%
February 15, 2021.... 1.160% 0.000%
March 15, 2021....... 1.111% 0.000%
April 15, 2021....... 1.062% 0.000%
May 15, 2021......... 1.014% 0.000%
</Table>
<Table>
<Caption>
CLASS B CLASS B
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
January 15, 2025..... 0.000% 0.000%
February 15, 2025.... 0.000% 0.000%
March 15, 2025....... 0.000% 0.000%
April 15, 2025....... 0.000% 0.000%
May 15, 2025......... 0.000% 0.000%
June 15, 2025........ 0.000% 0.000%
July 15, 2025........ 0.000% 0.000%
August 15, 2025...... 0.000% 0.000%
September 15, 2025... 0.000% 0.000%
October 15, 2025..... 0.000% 0.000%
November 15, 2025.... 0.000% 0.000%
December 15, 2025.... 0.000% 0.000%
January 15, 2026..... 0.000% 0.000%
February 15, 2026.... 0.000% 0.000%
March 15, 2026....... 0.000% 0.000%
April 15, 2026....... 0.000% 0.000%
May 15, 2026......... 0.000% 0.000%
June 15, 2026........ 0.000% 0.000%
</Table>
<Table>
<Caption>
CLASS B CLASS B
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
February 15, 2030.... 0.000% 0.000%
March 15, 2030....... 0.000% 0.000%
April 15, 2030....... 0.000% 0.000%
May 15, 2030......... 0.000% 0.000%
June 15, 2030........ 0.000% 0.000%
July 15, 2030........ 0.000% 0.000%
August 15, 2030...... 0.000% 0.000%
September 15, 2030... 0.000% 0.000%
October 15, 2030..... 0.000% 0.000%
November 15, 2030.... 0.000% 0.000%
December 15, 2030.... 0.000% 0.000%
January 15, 2031..... 0.000% 0.000%
February 15, 2031.... 0.000% 0.000%
March 15, 2031....... 0.000% 0.000%
April 15, 2031....... 0.000% 0.000%
May 15, 2031......... 0.000% 0.000%
June 15, 2031........ 0.000% 0.000%
July 15, 2031........ 0.000% 0.000%
</Table>
7
<Page>
CLASS C CLASS PERCENTAGES
<Table>
<Caption>
CLASS C CLASS C
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
Closing Date......... 9.088% 9.088%
July 15, 2001........ 9.094% 9.094%
August 15, 2001...... 9.106% 9.106%
September 15, 2001... 9.118% 9.118%
October 15, 2001..... 9.130% 9.130%
November 15, 2001.... 9.143% 9.143%
December 15, 2001.... 9.155% 9.155%
January 15, 2002..... 9.167% 9.167%
February 15, 2002.... 9.180% 9.180%
March 15, 2002....... 9.192% 9.192%
April 15, 2002....... 9.205% 9.205%
May 15, 2002......... 9.218% 9.218%
June 15, 2002........ 9.231% 9.231%
July 15, 2002........ 9.225% 9.223%
August 15, 2002...... 9.213% 9.210%
September 15, 2002... 9.193% 9.187%
October 15, 2002..... 9.187% 9.180%
November 15, 2002.... 9.176% 9.168%
December 15, 2002.... 9.157% 9.147%
January 15, 2003..... 9.152% 9.140%
February 15, 2003.... 9.142% 9.129%
March 15, 2003....... 9.124% 9.109%
April 15, 2003....... 9.117% 9.100%
May 15, 2003......... 9.103% 9.084%
June 15, 2003........ 9.083% 9.062%
July 15, 2003........ 9.088% 9.066%
August 15, 2003...... 9.074% 9.050%
September 15, 2003... 9.057% 9.032%
October 15, 2003..... 9.047% 9.020%
November 15, 2003.... 9.032% 9.003%
December 15, 2003.... 9.016% 8.986%
January 15, 2004..... 9.007% 8.975%
February 15, 2004.... 8.991% 8.958%
March 15, 2004....... 8.975% 8.940%
April 15, 2004....... 8.965% 8.928%
May 15, 2004......... 8.948% 8.909%
June 15, 2004........ 8.930% 8.890%
July 15, 2004........ 8.927% 8.886%
August 15, 2004...... 8.908% 8.867%
September 15, 2004... 8.889% 8.848%
October 15, 2004..... 8.875% 8.834%
November 15, 2004.... 8.857% 8.815%
December 15, 2004.... 8.838% 8.796%
January 15, 2005..... 8.826% 8.783%
February 15, 2005.... 8.807% 8.764%
March 15, 2005....... 8.787% 8.744%
April 15, 2005....... 8.775% 8.732%
May 15, 2005......... 8.755% 8.711%
June 15, 2005........ 8.734% 8.690%
July 15, 2005........ 8.720% 8.675%
August 15, 2005...... 8.699% 8.653%
</Table>
<Table>
<Caption>
CLASS C CLASS C
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
June 15, 2006........ 8.500% 8.450%
July 15, 2006........ 8.484% 8.433%
August 15, 2006...... 8.462% 8.410%
September 15, 2006... 8.440% 8.386%
October 15, 2006..... 8.424% 8.368%
November 15, 2006.... 8.401% 8.344%
December 15, 2006.... 8.378% 8.320%
January 15, 2007..... 8.361% 8.302%
February 15, 2007.... 8.338% 8.277%
March 15, 2007....... 8.314% 8.251%
April 15, 2007....... 8.297% 8.233%
May 15, 2007......... 8.273% 8.207%
June 15, 2007........ 8.249% 8.181%
July 15, 2007........ 8.231% 8.162%
August 15, 2007...... 8.206% 8.135%
September 15, 2007... 8.182% 8.109%
October 15, 2007..... 8.163% 8.089%
November 15, 2007.... 8.138% 8.062%
December 15, 2007.... 8.112% 8.034%
January 15, 2008..... 8.093% 8.013%
February 15, 2008.... 8.067% 7.985%
March 15, 2008....... 8.041% 7.956%
April 15, 2008....... 8.021% 7.934%
May 15, 2008......... 7.994% 7.905%
June 15, 2008........ 7.967% 7.875%
July 15, 2008........ 7.946% 7.852%
August 15, 2008...... 7.917% 7.822%
September 15, 2008... 7.889% 7.792%
October 15, 2008..... 7.867% 7.768%
November 15, 2008.... 7.838% 7.737%
December 15, 2008.... 7.809% 7.706%
January 15, 2009..... 7.786% 7.681%
February 15, 2009.... 7.757% 7.649%
March 15, 2009....... 7.726% 7.616%
April 15, 2009....... 7.703% 7.591%
May 15, 2009......... 7.672% 7.558%
June 15, 2009........ 7.641% 7.525%
July 15, 2009........ 7.616% 7.498%
August 15, 2009...... 7.583% 7.464%
September 15, 2009... 7.549% 7.430%
October 15, 2009..... 7.523% 7.402%
November 15, 2009.... 7.489% 7.367%
December 15, 2009.... 7.455% 7.331%
January 15, 2010..... 7.428% 7.303%
February 15, 2010.... 7.393% 7.267%
March 15, 2010....... 7.357% 7.230%
April 15, 2010....... 7.330% 7.200%
May 15, 2010......... 7.294% 7.163%
June 15, 2010........ 7.258% 7.125%
July 15, 2010........ 7.229% 7.094%
August 15, 2010...... 7.193% 7.056%
</Table>
<Table>
<Caption>
CLASS C CLASS C
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
June 15, 2011........ 6.836% 6.671%
July 15, 2011........ 6.806% 6.635%
August 15, 2011...... 6.770% 6.592%
September 15, 2011... 6.733% 6.548%
October 15, 2011..... 6.703% 6.510%
November 15, 2011.... 6.670% 6.471%
December 15, 2011.... 6.634% 6.427%
January 15, 2012..... 6.599% 6.384%
February 15, 2012.... 6.563% 6.340%
March 15, 2012....... 6.525% 6.294%
April 15, 2012....... 6.489% 6.249%
May 15, 2012......... 6.451% 6.203%
June 15, 2012........ 6.414% 6.157%
July 15, 2012........ 6.375% 6.110%
August 15, 2012...... 6.336% 6.063%
September 15, 2012... 6.297% 6.015%
October 15, 2012..... 6.256% 5.966%
November 15, 2012.... 6.216% 5.917%
December 15, 2012.... 6.175% 5.866%
January 15, 2013..... 6.134% 5.816%
February 15, 2013.... 6.093% 5.765%
March 15, 2013....... 6.048% 5.711%
April 15, 2013....... 6.007% 5.659%
May 15, 2013......... 5.963% 5.605%
June 15, 2013........ 5.921% 5.552%
July 15, 2013........ 5.878% 5.497%
August 15, 2013...... 5.835% 5.442%
September 15, 2013... 5.792% 5.387%
October 15, 2013..... 5.747% 5.330%
November 15, 2013.... 5.703% 5.273%
December 15, 2013.... 5.658% 5.215%
January 15, 2014..... 5.614% 5.158%
February 15, 2014.... 5.570% 5.099%
March 15, 2014....... 5.522% 5.038%
April 15, 2014....... 5.477% 4.978%
May 15, 2014......... 5.430% 4.916%
June 15, 2014........ 5.384% 4.854%
July 15, 2014........ 5.336% 4.791%
August 15, 2014...... 5.290% 4.728%
September 15, 2014... 5.243% 4.664%
October 15, 2014..... 5.195% 4.598%
November 15, 2014.... 5.147% 4.532%
December 15, 2014.... 5.097% 4.465%
January 15, 2015..... 5.049% 4.398%
February 15, 2015.... 5.000% 4.329%
March 15, 2015....... 4.948% 4.258%
April 15, 2015....... 4.899% 4.188%
May 15, 2015......... 4.848% 4.116%
June 15, 2015........ 4.797% 4.045%
July 15, 2015........ 4.746% 3.971%
August 15, 2015...... 4.695% 3.897%
</Table>
8
<Page>
<Table>
<Caption>
CLASS C CLASS C
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
September 15, 2005... 8.677% 8.632%
October 15, 2005..... 8.662% 8.616%
November 15, 2005.... 8.641% 8.595%
December 15, 2005.... 8.619% 8.573%
January 15, 2006..... 8.605% 8.557%
February 15, 2006.... 8.583% 8.535%
March 15, 2006....... 8.560% 8.512%
April 15, 2006....... 8.545% 8.496%
May 15, 2006......... 8.522% 8.473%
June 15, 2016........ 4.159% 3.092%
July 15, 2016........ 4.102% 3.005%
August 15, 2016...... 4.044% 2.917%
September 15, 2016... 3.987% 2.828%
October 15, 2016..... 3.928% 2.737%
November 15, 2016.... 3.870% 2.645%
December 15, 2016.... 3.828% 2.564%
January 15, 2017..... 3.769% 2.470%
February 15, 2017.... 3.710% 2.375%
March 15, 2017....... 3.649% 2.277%
April 15, 2017....... 3.589% 2.178%
May 15, 2017......... 3.528% 2.078%
June 15, 2017........ 3.468% 1.976%
July 15, 2017........ 3.407% 1.873%
August 15, 2017...... 3.346% 1.768%
September 15, 2017... 3.315% 1.679%
October 15, 2017..... 3.255% 1.572%
November 15, 2017.... 3.225% 1.480%
December 15, 2017.... 3.165% 1.372%
January 15, 2018..... 3.106% 1.262%
February 15, 2018.... 3.046% 1.151%
March 15, 2018....... 2.984% 1.037%
April 15, 2018....... 2.940% 0.929%
May 15, 2018......... 2.881% 0.815%
June 15, 2018........ 2.824% 0.702%
July 15, 2018........ 2.766% 0.588%
August 15, 2018...... 2.707% 0.472%
September 15, 2018... 2.648% 0.354%
October 15, 2018..... 2.590% 0.235%
November 15, 2018.... 2.531% 0.114%
December 15, 2018.... 2.472% 0.000%
January 15, 2019..... 2.414% 0.000%
February 15, 2019.... 2.355% 0.000%
March 15, 2019....... 2.295% 0.000%
April 15, 2019....... 2.236% 0.000%
May 15, 2019......... 2.177% 0.000%
June 15, 2019........ 2.118% 0.000%
July 15, 2019........ 2.059% 0.000%
August 15, 2019...... 2.015% 0.000%
September 15, 2019... 1.969% 0.000%
October 15, 2019..... 1.925% 0.000%
</Table>
<Table>
<Caption>
CLASS C CLASS C
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
September 15, 2010... 7.157% 7.018%
October 15, 2010 7.127% 6.986%
November 15, 2010.... 7.090% 6.947%
December 15, 2010.... 7.053% 6.906%
January 15, 2011..... 7.023% 6.873%
February 15, 2011.... 6.985% 6.833%
March 15, 2011....... 6.944% 6.790%
April 15, 2011....... 6.914% 6.756%
May 15, 2011......... 6.874% 6.713%
June 15, 2021........ 0.918% 0.000%
July 15, 2021........ 0.871% 0.000%
August 15, 2021...... 0.824% 0.000%
September 15, 2021... 0.778% 0.000%
October 15, 2021..... 0.732% 0.000%
November 15, 2021.... 0.687% 0.000%
December 15, 2021.... 0.643% 0.000%
January 15, 2022..... 0.600% 0.000%
February 15, 2022.... 0.557% 0.000%
March 15, 2022....... 0.515% 0.000%
April 15, 2022....... 0.475% 0.000%
May 15, 2022......... 0.435% 0.000%
June 15, 2022........ 0.396% 0.000%
July 15, 2022........ 0.358% 0.000%
August 15, 2022...... 0.322% 0.000%
September 15, 2022... 0.286% 0.000%
October 15, 2022..... 0.261% 0.000%
November 15, 2022.... 0.229% 0.000%
December 15, 2022.... 0.199% 0.000%
January 15, 2023..... 0.171% 0.000%
February 15, 2023.... 0.144% 0.000%
March 15, 2023....... 0.119% 0.000%
April 15, 2023....... 0.096% 0.000%
May 15, 2023......... 0.075% 0.000%
June 15, 2023........ 0.056% 0.000%
July 15, 2023........ 0.040% 0.000%
August 15, 2023...... 0.026% 0.000%
September 15, 2023... 0.014% 0.000%
October 15, 2023..... 0.006% 0.000%
November 15, 2023.... 0.001% 0.000%
December 15, 2023.... 0.000% 0.000%
January 15, 2024..... 0.000% 0.000%
February 15, 2024.... 0.000% 0.000%
March 15, 2024....... 0.000% 0.000%
April 15, 2024....... 0.000% 0.000%
May 15, 2024......... 0.000% 0.000%
June 15, 2024........ 0.000% 0.000%
July 15, 2024........ 0.000% 0.000%
August 15, 2024...... 0.000% 0.000%
September 15, 2024... 0.000% 0.000%
October 15, 2024..... 0.000% 0.000%
</Table>
<Table>
<Caption>
CLASS C CLASS C
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
September 15, 2015... 4.644% 3.822%
October 15, 2015..... 4.591% 3.745%
November 15, 2015.... 4.539% 3.667%
December 15, 2015.... 4.486% 3.588%
January 15, 2016..... 4.433% 3.509%
February 15, 2016.... 4.379% 3.428%
March 15, 2016....... 4.324% 3.345%
April 15, 2016....... 4.270% 3.262%
May 15, 2016......... 4.214% 3.177%
July 15, 2026........ 0.000% 0.000%
August 15, 2026...... 0.000% 0.000%
September 15, 2026... 0.000% 0.000%
October 15, 2026..... 0.000% 0.000%
November 15, 2026.... 0.000% 0.000%
December 15, 2026.... 0.000% 0.000%
January 15, 2027..... 0.000% 0.000%
February 15, 2027.... 0.000% 0.000%
March 15, 2027....... 0.000% 0.000%
April 15, 2027....... 0.000% 0.000%
May 15, 2027......... 0.000% 0.000%
June 15, 2027........ 0.000% 0.000%
July 15, 2027........ 0.000% 0.000%
August 15, 2027...... 0.000% 0.000%
September 15, 2027... 0.000% 0.000%
October 15, 2027..... 0.000% 0.000%
November 15, 2027.... 0.000% 0.000%
December 15, 2027.... 0.000% 0.000%
January 15, 2028..... 0.000% 0.000%
February 15, 2028.... 0.000% 0.000%
March 15, 2028....... 0.000% 0.000%
April 15, 2028....... 0.000% 0.000%
May 15, 2028......... 0.000% 0.000%
June 15, 2028........ 0.000% 0.000%
July 15, 2028........ 0.000% 0.000%
August 15, 2028...... 0.000% 0.000%
September 15, 2028... 0.000% 0.000%
October 15, 2028..... 0.000% 0.000%
November 15, 2028.... 0.000% 0.000%
December 15, 2028.... 0.000% 0.000%
January 15, 2029..... 0.000% 0.000%
February 15, 2029.... 0.000% 0.000%
March 15, 2029....... 0.000% 0.000%
April 15, 2029....... 0.000% 0.000%
May 15, 2029......... 0.000% 0.000%
June 15, 2029........ 0.000% 0.000%
July 15, 2029........ 0.000% 0.000%
August 15, 2029...... 0.000% 0.000%
September 15, 2029... 0.000% 0.000%
October 15, 2029..... 0.000% 0.000%
November 15, 2029.... 0.000% 0.000%
</Table>
9
<Page>
<Table>
<Caption>
CLASS C CLASS C
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
November 15, 2019.... 1.870% 0.000%
December 15, 2019.... 1.814% 0.000%
January 15, 2020..... 1.758% 0.000%
February 15, 2020.... 1.702% 0.000%
March 15, 2020....... 1.646% 0.000%
April 15, 2020....... 1.601% 0.000%
May 15, 2020......... 1.557% 0.000%
June 15, 2020........ 1.505% 0.000%
July 15, 2020........ 1.452% 0.000%
August 15, 2020...... 1.400% 0.000%
September 15, 2020... 1.348% 0.000%
October 15, 2020..... 1.296% 0.000%
November 15, 2020.... 1.253% 0.000%
December 15, 2020.... 1.202% 0.000%
January 15, 2021..... 1.161% 0.000%
February 15, 2021.... 1.112% 0.000%
March 15, 2021....... 1.062% 0.000%
April 15, 2021....... 1.014% 0.000%
May 15, 2021......... 0.965% 0.000%
</Table>
<Table>
<Caption>
CLASS C CLASS C
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
November 15, 2024.... 0.000% 0.000%
December 15, 2024.... 0.000% 0.000%
January 15, 2025..... 0.000% 0.000%
February 15, 2025.... 0.000% 0.000%
March 15, 2025....... 0.000% 0.000%
April 15, 2025....... 0.000% 0.000%
May 15, 2025......... 0.000% 0.000%
June 15, 2025........ 0.000% 0.000%
July 15, 2025........ 0.000% 0.000%
August 15, 2025...... 0.000% 0.000%
September 15, 2025... 0.000% 0.000%
October 15, 2025..... 0.000% 0.000%
November 15, 2025.... 0.000% 0.000%
December 15, 2025.... 0.000% 0.000%
January 15, 2026..... 0.000% 0.000%
February 15, 2026.... 0.000% 0.000%
March 15, 2026....... 0.000% 0.000%
April 15, 2026....... 0.000% 0.000%
May 15, 2026......... 0.000% 0.000%
June 15, 2026........ 0.000% 0.000%
</Table>
<Table>
<Caption>
CLASS C CLASS C
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
------------ ----------- -----------
December 15, 2029.... 0.000% 0.000%
January 15, 2030..... 0.000% 0.000%
February 15, 2030.... 0.000% 0.000%
March 15, 2030....... 0.000% 0.000%
April 15, 2030....... 0.000% 0.000%
May 15, 2030......... 0.000% 0.000%
June 15, 2030........ 0.000% 0.000%
July 15, 2030........ 0.000% 0.000%
August 15, 2030...... 0.000% 0.000%
September 15, 2030... 0.000% 0.000%
October 15, 2030..... 0.000% 0.000%
November 15, 2030.... 0.000% 0.000%
December 15, 2030.... 0.000% 0.000%
January 15, 2031..... 0.000% 0.000%
February 15, 2031.... 0.000% 0.000%
March 15, 2031....... 0.000% 0.000%
April 15, 2031....... 0.000% 0.000%
May 15, 2031......... 0.000% 0.000%
June 15, 2031........ 0.000% 0.000%
July 15, 2031........ 0.000% 0.000%
</Table>
10
<Page>
CLASS D CLASS PERCENTAGES
<Table>
<Caption>
CLASS D CLASS D CLASS D CLASS D
MINIMUM SCHEDULED MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS PAYMENT DATE CLASS CLASS PAYMENT DATE
OCCURRING IN PERCENTAGES PERCENTAGES OCCURRING IN PERCENTAGES PERCENTAGES OCCURRING IN
-------------------- ----------- ----------- ------------------- ----------- ----------- -------------------
Closing Date........ 3.867% 3.867% June 15, 2006...... 3.641% 3.596% June 15, 2011......
July 15, 2001....... 3.870% 3.870% July 15, 2006...... 3.635% 3.589% July 15, 2011......
August 15, 2001..... 3.875% 3.875% August 15, 2006.... 3.626% 3.579% August 15, 2011....
September 15, September 15, September 15,
2001................ 3.880% 3.880% 2006............... 3.617% 3.568% 2011...............
October 15, 2001.... 3.885% 3.885% October 15, 2006... 3.611% 3.561% October 15, 2011...
November 15, 2001... 3.890% 3.890% November 15, 2006.. 3.602% 3.551% November 15, 2011..
December 15, 2001... 3.896% 3.896% December 15, 2006.. 3.592% 3.540% December 15, 2011..
January 15, 2002.... 3.901% 3.901% January 15, 2007... 3.586% 3.533% January 15, 2012...
February 15, February 15,
February 15, 2002... 3.906% 3.906% 2007............... 3.576% 3.522% 2012...............
March 15, 2002...... 3.912% 3.912% March 15, 2007..... 3.567% 3.511% March 15, 2012.....
April 15, 2002...... 3.917% 3.917% April 15, 2007..... 3.560% 3.503% April 15, 2012.....
May 15, 2002........ 3.922% 3.922% May 15, 2007....... 3.550% 3.492% May 15, 2012.......
June 15, 2002....... 3.928% 3.928% June 15, 2007...... 3.540% 3.481% June 15, 2012......
July 15, 2002....... 3.925% 3.925% July 15, 2007...... 3.533% 3.473% July 15, 2012......
August 15, 2002..... 3.920% 3.919% August 15, 2007.... 3.523% 3.462% August 15, 2012....
September 15, September 15, September 15,
2002................ 3.912% 3.910% 2007............... 3.513% 3.451% 2012...............
October 15, 2002.... 3.909% 3.906% October 15, 2007... 3.506% 3.442% October 15, 2012...
November 15, 2002... 3.905% 3.901% November 15, 2007.. 3.496% 3.430% November 15, 2012..
December 15, 2002... 3.897% 3.892% December 15, 2007.. 3.485% 3.419% December 15, 2012..
January 15, 2003.... 3.895% 3.889% January 15, 2008... 3.478% 3.410% January 15, 2013...
February 15, February 15,
February 15, 2003... 3.890% 3.885% 2008............... 3.467% 3.398% 2013...............
March 15, 2003...... 3.883% 3.876% March 15, 2008..... 3.456% 3.386% March 15, 2013.....
April 15, 2003...... 3.880% 3.872% April 15, 2008..... 3.448% 3.376% April 15, 2013.....
May 15, 2003........ 3.874% 3.866% May 15, 2008....... 3.437% 3.364% May 15, 2013.......
June 15, 2003....... 3.866% 3.856% June 15, 2008...... 3.426% 3.351% June 15, 2013......
July 15, 2003....... 3.868% 3.858% July 15, 2008...... 3.418% 3.341% July 15, 2013......
August 15, 2003..... 3.862% 3.851% August 15, 2008.... 3.407% 3.329% August 15, 2013....
September 15, September 15, September 15,
2003................ 3.855% 3.843% 2008............... 3.395% 3.316% 2013...............
October 15, 2003.... 3.851% 3.838% October 15, 2008... 3.387% 3.306% October 15, 2013...
November 15, 2003... 3.845% 3.831% November 15, 2008.. 3.375% 3.292% November 15, 2013..
December 15, 2003... 3.838% 3.824% December 15, 2008.. 3.363% 3.279% December 15, 2013..
January 15, 2004.... 3.834% 3.819% January 15, 2009... 3.355% 3.268% January 15, 2014...
February 15, February 15,
February 15, 2004... 3.828% 3.812% 2009............... 3.343% 3.255% 2014...............
March 15, 2004...... 3.821% 3.804% March 15, 2009..... 3.331% 3.241% March 15, 2014.....
April 15, 2004...... 3.817% 3.799% April 15, 2009..... 3.322% 3.230% April 15, 2014.....
May 15, 2004........ 3.810% 3.791% May 15, 2009....... 3.309% 3.216% May 15, 2014.......
June 15, 2004....... 3.803% 3.783% June 15, 2009...... 3.297% 3.202% June 15, 2014......
July 15, 2004....... 3.802% 3.781% July 15, 2009...... 3.288% 3.191% July 15, 2014......
August 15, 2004..... 3.795% 3.773% August 15, 2009.... 3.275% 3.176% August 15, 2014....
September 15, September 15, September 15,
2004................ 3.787% 3.765% 2009............... 3.263% 3.162% 2014...............
October 15, 2004.... 3.783% 3.759% October 15, 2009... 3.253% 3.150% October 15, 2014...
November 15, 2004... 3.776% 3.751% November 15, 2009.. 3.240% 3.135% November 15, 2014..
December 15, 2004... 3.768% 3.743% December 15, 2009.. 3.227% 3.120% December 15, 2014..
January 15, 2005.... 3.764% 3.738% January 15, 2010... 3.217% 3.108% January 15, 2015...
February 15, February 15,
February 15, 2005... 3.757% 3.729% 2010............... 3.204% 3.092% 2015...............
March 15, 2005...... 3.749% 3.721% March 15, 2010..... 3.190% 3.076% March 15, 2015.....
April 15, 2005...... 3.745% 3.716% April 15, 2010..... 3.180% 3.064% April 15, 2015.....
May 15, 2005........ 3.737% 3.707% May 15, 2010....... 3.166% 3.048% May 15, 2015.......
June 15, 2005....... 3.729% 3.698% June 15, 2010...... 3.153% 3.032% June 15, 2015......
July 15, 2005....... 3.724% 3.691% July 15, 2010...... 3.142% 3.019% July 15, 2015......
August 15, 2005..... 3.716% 3.682% August 15, 2010.... 3.128% 3.003% August 15, 2015....
September 15, September 15, September 15,
2005................ 3.708% 3.673% 2010............... 3.114% 2.986% 2015...............
October 15, 2005.... 3.703% 3.667% October 15, 2010... 3.103% 2.973% October 15, 2015...
November 15, 2005... 3.695% 3.657% November 15, 2010.. 3.089% 2.956% November 15, 2015..
December 15, 2005... 3.686% 3.648% December 15, 2010.. 3.075% 2.939% December 15, 2015..
<Caption>
CLASS D CLASS D
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
-------------------- ----------- -----------
Closing Date........ 2.992% 2.839%
July 15, 2001....... 2.979% 2.823%
August 15, 2001..... 2.964% 2.805%
September 15,
2001................ 2.949% 2.786%
October 15, 2001.... 2.936% 2.770%
November 15, 2001... 2.923% 2.754%
December 15, 2001... 2.908% 2.735%
January 15, 2002.... 2.893% 2.717%
February 15, 2002... 2.878% 2.698%
March 15, 2002...... 2.862% 2.678%
April 15, 2002...... 2.847% 2.659%
May 15, 2002........ 2.831% 2.640%
June 15, 2002....... 2.815% 2.620%
July 15, 2002....... 2.799% 2.600%
August 15, 2002..... 2.783% 2.580%
September 15,
2002................ 2.767% 2.560%
October 15, 2002.... 2.750% 2.539%
November 15, 2002... 2.733% 2.518%
December 15, 2002... 2.716% 2.496%
January 15, 2003.... 2.699% 2.475%
February 15, 2003... 2.682% 2.453%
March 15, 2003...... 2.664% 2.430%
April 15, 2003...... 2.646% 2.408%
May 15, 2003........ 2.628% 2.385%
June 15, 2003....... 2.611% 2.362%
July 15, 2003....... 2.593% 2.339%
August 15, 2003..... 2.575% 2.316%
September 15,
2003................ 2.557% 2.292%
October 15, 2003.... 2.538% 2.268%
November 15, 2003... 2.520% 2.244%
December 15, 2003... 2.501% 2.219%
January 15, 2004.... 2.483% 2.195%
February 15, 2004... 2.464% 2.170%
March 15, 2004...... 2.444% 2.144%
April 15, 2004...... 2.425% 2.118%
May 15, 2004........ 2.406% 2.092%
June 15, 2004....... 2.386% 2.066%
July 15, 2004....... 2.365% 2.039%
August 15, 2004..... 2.345% 2.012%
September 15,
2004................ 2.325% 1.985%
October 15, 2004.... 2.303% 1.957%
November 15, 2004... 2.283% 1.929%
December 15, 2004... 2.261% 1.900%
January 15, 2005.... 2.240% 1.871%
February 15, 2005... 2.218% 1.842%
March 15, 2005...... 2.196% 1.812%
April 15, 2005...... 2.174% 1.782%
May 15, 2005........ 2.152% 1.752%
June 15, 2005....... 2.129% 1.721%
July 15, 2005....... 2.107% 1.690%
August 15, 2005..... 2.084% 1.658%
September 15,
2005................ 2.061% 1.626%
October 15, 2005.... 2.038% 1.594%
November 15, 2005... 2.015% 1.561%
December 15, 2005... 1.991% 1.527%
</Table>
11
<Page>
<Table>
<Caption>
CLASS D CLASS D CLASS D CLASS D
MINIMUM SCHEDULED MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS PAYMENT DATE CLASS CLASS PAYMENT DATE
OCCURRING IN PERCENTAGES PERCENTAGES OCCURRING IN PERCENTAGES PERCENTAGES OCCURRING IN
-------------------- ----------- ----------- ------------------- ----------- ----------- -------------------
January 15, 2006.... 3.681% 3.641% January 15, 2011... 3.063% 2.925% January 15, 2016...
February 15, February 15,
February 15, 2006... 3.673% 3.632% 2011............... 3.049% 2.908% 2016...............
March 15, 2006...... 3.664% 3.622% March 15, 2011..... 3.033% 2.889% March 15, 2016.....
April 15, 2006...... 3.658% 3.615% April 15, 2011..... 3.022% 2.875% April 15, 2016.....
May 15, 2006........ 3.650% 3.606% May 15, 2011....... 3.007% 2.857% May 15, 2016.......
June 15, 2016....... 1.846% 1.316% June 15, 2021...... 0.423% 0.000% July 15, 2026......
July 15, 2016....... 1.821% 1.279% July 15, 2021...... 0.402% 0.000% August 15, 2026....
September 15,
August 15, 2016..... 1.795% 1.241% August 15, 2021.... 0.381% 0.000% 2026...............
September 15, September 15,
2016................ 1.770% 1.203% 2021............... 0.361% 0.000% October 15, 2026...
October 15, 2016.... 1.744% 1.165% October 15, 2021... 0.340% 0.000% November 15, 2026..
November 15, 2016... 1.718% 1.126% November 15, 2021.. 0.320% 0.000% December 15, 2026..
December 15, 2016... 1.699% 1.091% December 15, 2021.. 0.300% 0.000% January 15, 2027...
February 15,
January 15, 2017.... 1.673% 1.051% January 15, 2022... 0.280% 0.000% 2027...............
February 15,
February 15, 2017... 1.647% 1.010% 2022............... 0.261% 0.000% March 15, 2027.....
March 15, 2017...... 1.620% 0.969% March 15, 2022..... 0.242% 0.000% April 15, 2027.....
April 15, 2017...... 1.593% 0.927% April 15, 2022..... 0.224% 0.000% May 15, 2027.......
May 15, 2017........ 1.566% 0.884% May 15, 2022....... 0.205% 0.000% June 15, 2027......
June 15, 2017....... 1.539% 0.841% June 15, 2022...... 0.188% 0.000% July 15, 2027......
July 15, 2017....... 1.512% 0.797% July 15, 2022...... 0.170% 0.000% August 15, 2027....
September 15,
August 15, 2017..... 1.485% 0.752% August 15, 2022.... 0.153% 0.000% 2027...............
September 15, September 15,
2017................ 1.472% 0.714% 2022............... 0.137% 0.000% October 15, 2027...
October 15, 2017.... 1.445% 0.669% October 15, 2022... 0.125% 0.000% November 15, 2027..
November 15, 2017... 1.432% 0.630% November 15, 2022.. 0.111% 0.000% December 15, 2027..
December 15, 2017... 1.405% 0.584% December 15, 2022.. 0.097% 0.000% January 15, 2028...
February 15,
January 15, 2018.... 1.379% 0.537% January 15, 2023... 0.083% 0.000% 2028...............
February 15,
February 15, 2018... 1.352% 0.490% 2023............... 0.070% 0.000% March 15, 2028.....
March 15, 2018...... 1.325% 0.441% March 15, 2023..... 0.059% 0.000% April 15, 2028.....
April 15, 2018...... 1.305% 0.395% April 15, 2023..... 0.048% 0.000% May 15, 2028.......
May 15, 2018........ 1.279% 0.347% May 15, 2023....... 0.038% 0.000% June 15, 2028......
June 15, 2018....... 1.254% 0.299% June 15, 2023...... 0.028% 0.000% July 15, 2028......
July 15, 2018....... 1.229% 0.250% July 15, 2023...... 0.020% 0.000% August 15, 2028....
September 15,
August 15, 2018..... 1.203% 0.201% August 15, 2023.... 0.013% 0.000% 2028...............
September 15, September 15,
2018................ 1.178% 0.151% 2023............... 0.008% 0.000% October 15, 2028...
October 15, 2018.... 1.153% 0.100% October 15, 2023... 0.003% 0.000% November 15, 2028..
November 15, 2018... 1.128% 0.049% November 15, 2023.. 0.000% 0.000% December 15, 2028..
December 15, 2018... 1.102% 0.000% December 15, 2023.. 0.000% 0.000% January 15, 2029...
February 15,
January 15, 2019.... 1.077% 0.000% January 15, 2024... 0.000% 0.000% 2029...............
February 15,
February 15, 2019... 1.052% 0.000% 2024............... 0.000% 0.000% March 15, 2029.....
March 15, 2019...... 1.026% 0.000% March 15, 2024..... 0.000% 0.000% April 15, 2029.....
April 15, 2019...... 1.001% 0.000% April 15, 2024..... 0.000% 0.000% May 15, 2029.......
May 15, 2019........ 0.975% 0.000% May 15, 2024....... 0.000% 0.000% June 15, 2029......
June 15, 2019....... 0.950% 0.000% June 15, 2024...... 0.000% 0.000% July 15, 2029......
July 15, 2019....... 0.924% 0.000% July 15, 2024...... 0.000% 0.000% August 15, 2029....
September 15,
August 15, 2019..... 0.905% 0.000% August 15, 2024.... 0.000% 0.000% 2029...............
September 15, September 15,
2019................ 0.885% 0.000% 2024............... 0.000% 0.000% October 15, 2029...
October 15, 2019.... 0.866% 0.000% October 15, 2024... 0.000% 0.000% November 15, 2029..
November 15, 2019... 0.842% 0.000% November 15, 2024.. 0.000% 0.000% December 15, 2029..
December 15, 2019... 0.818% 0.000% December 15, 2024.. 0.000% 0.000% January 15, 2030...
February 15,
January 15, 2020.... 0.794% 0.000% January 15, 2025... 0.000% 0.000% 2030...............
February 15,
February 15, 2020... 0.769% 0.000% 2025............... 0.000% 0.000% March 15, 2030.....
March 15, 2020...... 0.745% 0.000% March 15, 2025..... 0.000% 0.000% April 15, 2030.....
April 15, 2020...... 0.725% 0.000% April 15, 2025..... 0.000% 0.000% May 15, 2030.......
May 15, 2020........ 0.706% 0.000% May 15, 2025....... 0.000% 0.000% June 15, 2030......
June 15, 2020....... 0.683% 0.000% June 15, 2025...... 0.000% 0.000% July 15, 2030......
July 15, 2020....... 0.660% 0.000% July 15, 2025...... 0.000% 0.000% August 15, 2030....
<Caption>
CLASS D CLASS D
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
-------------------- ----------- -----------
January 15, 2006.... 1.968% 1.493%
February 15, 2006... 1.944% 1.459%
March 15, 2006...... 1.919% 1.423%
April 15, 2006...... 1.895% 1.388%
May 15, 2006........ 1.871% 1.352%
June 15, 2016....... 0.000% 0.000%
July 15, 2016....... 0.000% 0.000%
August 15, 2016..... 0.000% 0.000%
September 15,
2016................ 0.000% 0.000%
October 15, 2016.... 0.000% 0.000%
November 15, 2016... 0.000% 0.000%
December 15, 2016... 0.000% 0.000%
January 15, 2017.... 0.000% 0.000%
February 15, 2017... 0.000% 0.000%
March 15, 2017...... 0.000% 0.000%
April 15, 2017...... 0.000% 0.000%
May 15, 2017........ 0.000% 0.000%
June 15, 2017....... 0.000% 0.000%
July 15, 2017....... 0.000% 0.000%
August 15, 2017..... 0.000% 0.000%
September 15,
2017................ 0.000% 0.000%
October 15, 2017.... 0.000% 0.000%
November 15, 2017... 0.000% 0.000%
December 15, 2017... 0.000% 0.000%
January 15, 2018.... 0.000% 0.000%
February 15, 2018... 0.000% 0.000%
March 15, 2018...... 0.000% 0.000%
April 15, 2018...... 0.000% 0.000%
May 15, 2018........ 0.000% 0.000%
June 15, 2018....... 0.000% 0.000%
July 15, 2018....... 0.000% 0.000%
August 15, 2018..... 0.000% 0.000%
September 15,
2018................ 0.000% 0.000%
October 15, 2018.... 0.000% 0.000%
November 15, 2018... 0.000% 0.000%
December 15, 2018... 0.000% 0.000%
January 15, 2019.... 0.000% 0.000%
February 15, 2019... 0.000% 0.000%
March 15, 2019...... 0.000% 0.000%
April 15, 2019...... 0.000% 0.000%
May 15, 2019........ 0.000% 0.000%
June 15, 2019....... 0.000% 0.000%
July 15, 2019....... 0.000% 0.000%
August 15, 2019..... 0.000% 0.000%
September 15,
2019................ 0.000% 0.000%
October 15, 2019.... 0.000% 0.000%
November 15, 2019... 0.000% 0.000%
December 15, 2019... 0.000% 0.000%
January 15, 2020.... 0.000% 0.000%
February 15, 2020... 0.000% 0.000%
March 15, 2020...... 0.000% 0.000%
April 15, 2020...... 0.000% 0.000%
May 15, 2020........ 0.000% 0.000%
June 15, 2020....... 0.000% 0.000%
July 15, 2020....... 0.000% 0.000%
</Table>
12
<Page>
<Table>
<Caption>
CLASS D CLASS D CLASS D CLASS D
MINIMUM SCHEDULED MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS PAYMENT DATE CLASS CLASS PAYMENT DATE
OCCURRING IN PERCENTAGES PERCENTAGES OCCURRING IN PERCENTAGES PERCENTAGES OCCURRING IN
-------------------- ----------- ----------- ------------------- ----------- ----------- -------------------
September 15,
August 15, 2020..... 0.637% 0.000% August 15, 2025.... 0.000% 0.000% 2030...............
September 15, September 15,
2020................ 0.614% 0.000% 2025............... 0.000% 0.000% October 15, 2030...
October 15, 2020.... 0.591% 0.000% October 15, 2025... 0.000% 0.000% November 15, 2030..
November 15, 2020... 0.572% 0.000% November 15, 2025.. 0.000% 0.000% December 15, 2030..
December 15, 2020... 0.550% 0.000% December 15, 2025.. 0.000% 0.000% January 15, 2031...
February 15,
January 15, 2021.... 0.531% 0.000% January 15, 2026... 0.000% 0.000% 2031...............
February 15,
February 15, 2021... 0.510% 0.000% 2026............... 0.000% 0.000% March 15, 2031.....
March 15, 2021...... 0.488% 0.000% March 15, 2026..... 0.000% 0.000% April 15, 2031.....
April 15, 2021...... 0.466% 0.000% April 15, 2026..... 0.000% 0.000% May 15, 2031.......
May 15, 2021........ 0.445% 0.000% May 15, 2026....... 0.000% 0.000% June 15, 2031......
June 15, 2026...... 0.000% 0.000% July 15, 2031......
<Caption>
CLASS D CLASS D
MINIMUM SCHEDULED
PAYMENT DATE CLASS CLASS
OCCURRING IN PERCENTAGES PERCENTAGES
-------------------- ----------- -----------
August 15, 2020..... 0.000% 0.000%
September 15,
2020................ 0.000% 0.000%
October 15, 2020.... 0.000% 0.000%
November 15, 2020... 0.000% 0.000%
December 15, 2020... 0.000% 0.000%
January 15, 2021.... 0.000% 0.000%
February 15, 2021... 0.000% 0.000%
March 15, 2021...... 0.000% 0.000%
April 15, 2021...... 0.000% 0.000%
May 15, 2021........ 0.000% 0.000%
0.000% 0.000%
</Table>
13
<Page>
APPENDIX 6
The "Pool Factors" contained in the following Appendix 6 represent
percentages to be incorporated in the calculations found on page 117 under
"Description of the Notes--Priority of Payments--Allocation of Principal Among
Subclasses of Notes." Those calculations are used to determine, in the case of
insufficient funds to make a principal payment to all subclasses of a series of
notes, the basis on which the available funds are allocated among the
subclasses.
1
<Page>
APPENDIX 6
POOL FACTORS
The following are the Pool Factors as of June 26, 2001. These Pool Factors
may be changed by a resolution of the Controlling Trustees in connection with a
refinancing of the notes or the acquisition of additional aircraft.
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
--------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Closing Date......... 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000%
July 15, 2001........ 100.000% 100.000% 98.705% 99.493% 99.493% 100.000% 100.000% 100.000% 100.000%
August 15, 2001...... 100.000% 100.000% 97.947% 99.196% 99.196% 100.000% 100.000% 100.000% 100.000%
September 15, 2001... 100.000% 100.000% 96.909% 98.789% 98.789% 100.000% 100.000% 100.000% 100.000%
October 15, 2001..... 100.000% 100.000% 96.336% 98.565% 98.565% 100.000% 100.000% 100.000% 100.000%
November 15, 2001.... 100.000% 100.000% 95.621% 98.285% 98.285% 100.000% 100.000% 100.000% 100.000%
December 15, 2001.... 100.000% 100.000% 94.633% 97.898% 97.898% 100.000% 100.000% 100.000% 100.000%
January 15, 2002..... 100.000% 100.000% 94.095% 97.687% 97.687% 100.000% 100.000% 100.000% 100.000%
February 15, 2002.... 100.000% 100.000% 93.368% 97.402% 97.402% 100.000% 100.000% 100.000% 100.000%
March 15, 2002....... 100.000% 100.000% 92.346% 97.002% 97.002% 100.000% 100.000% 100.000% 100.000%
April 15, 2002....... 100.000% 100.000% 91.770% 96.776% 96.776% 100.000% 100.000% 100.000% 100.000%
May 15, 2002......... 100.000% 100.000% 90.960% 96.459% 96.459% 100.000% 100.000% 100.000% 100.000%
June 15, 2002........ 100.000% 100.000% 89.873% 96.033% 96.033% 100.000% 100.000% 100.000% 100.000%
July 15, 2002........ 100.000% 100.000% 89.330% 95.821% 95.821% 99.778% 99.778% 99.778% 99.778%
August 15, 2002...... 100.000% 100.000% 88.630% 95.546% 95.546% 99.493% 99.493% 99.493% 99.493%
September 15, 2002... 100.000% 100.000% 87.691% 95.178% 95.178% 99.110% 99.110% 99.110% 99.110%
October 15, 2002..... 100.000% 100.000% 87.153% 94.968% 94.968% 98.890% 98.890% 98.890% 98.890%
November 15, 2002.... 100.000% 100.000% 86.481% 94.705% 94.705% 98.616% 98.616% 98.616% 98.616%
December 15, 2002.... 100.000% 100.000% 85.567% 94.346% 94.346% 98.243% 98.243% 98.243% 98.243%
January 15, 2003..... 100.000% 100.000% 85.045% 94.142% 94.142% 98.031% 98.031% 98.031% 98.031%
February 15, 2003.... 100.000% 100.000% 84.385% 93.884% 93.884% 97.761% 97.761% 97.761% 97.761%
March 15, 2003....... 100.000% 100.000% 83.507% 93.540% 93.540% 97.403% 97.403% 97.403% 97.403%
April 15, 2003....... 100.000% 100.000% 82.922% 93.310% 93.310% 97.164% 97.164% 97.164% 97.164%
May 15, 2003......... 100.000% 100.000% 82.149% 93.008% 93.008% 96.849% 96.849% 96.849% 96.849%
June 15, 2003........ 100.000% 100.000% 81.222% 92.645% 92.645% 96.471% 96.471% 96.471% 96.471%
July 15, 2003........ 100.000% 100.000% 80.956% 92.540% 92.540% 96.363% 96.363% 96.363% 96.363%
August 15, 2003...... 100.000% 100.000% 80.179% 92.236% 92.236% 96.046% 96.046% 96.046% 96.046%
September 15, 2003... 100.000% 100.000% 79.345% 91.909% 91.909% 95.706% 95.706% 95.706% 95.706%
October 15, 2003..... 100.000% 100.000% 78.680% 91.649% 91.649% 95.435% 95.435% 95.435% 95.435%
November 15, 2003.... 100.000% 100.000% 77.878% 91.335% 91.335% 95.107% 95.107% 95.107% 95.107%
December 15, 2003.... 100.000% 100.000% 77.067% 91.017% 91.017% 94.777% 94.777% 94.777% 94.777%
January 15, 2004..... 100.000% 100.000% 76.414% 90.761% 90.761% 94.510% 94.510% 94.510% 94.510%
February 15, 2004.... 100.000% 100.000% 75.599% 90.442% 90.442% 94.178% 94.178% 94.178% 94.178%
March 15, 2004....... 100.000% 100.000% 74.772% 90.118% 90.118% 93.840% 93.840% 93.840% 93.840%
April 15, 2004....... 100.000% 100.000% 74.102% 89.856% 89.856% 93.567% 93.567% 93.567% 93.567%
May 15, 2004......... 100.000% 100.000% 73.242% 89.519% 89.519% 93.216% 93.216% 93.216% 93.216%
June 15, 2004........ 100.000% 100.000% 72.381% 89.182% 89.182% 92.865% 92.865% 92.865% 92.865%
July 15, 2004........ 100.000% 100.000% 71.901% 88.993% 88.993% 92.669% 92.669% 92.669% 92.669%
August 15, 2004...... 100.000% 100.000% 71.033% 88.653% 88.653% 92.315% 92.315% 92.315% 92.315%
September 15, 2004... 100.000% 100.000% 70.160% 88.312% 88.312% 91.959% 91.959% 91.959% 91.959%
October 15, 2004..... 100.000% 100.000% 69.437% 88.028% 88.028% 91.664% 91.664% 91.664% 91.664%
November 15, 2004.... 100.000% 100.000% 68.579% 87.692% 87.692% 91.314% 91.314% 91.314% 91.314%
December 15, 2004.... 100.000% 100.000% 67.712% 87.353% 87.353% 90.961% 90.961% 90.961% 90.961%
January 15, 2005..... 100.000% 100.000% 67.003% 87.075% 87.075% 90.672% 90.672% 90.672% 90.672%
February 15, 2005.... 100.000% 100.000% 66.132% 86.734% 86.734% 90.316% 90.316% 90.316% 90.316%
March 15, 2005....... 100.000% 100.000% 65.245% 86.386% 86.386% 89.954% 89.954% 89.954% 89.954%
April 15, 2005....... 100.000% 100.000% 64.548% 86.113% 86.113% 89.670% 89.670% 89.670% 89.670%
May 15, 2005......... 100.000% 100.000% 63.636% 85.756% 85.756% 89.298% 89.298% 89.298% 89.298%
June 15, 2005........ 100.000% 100.000% 62.723% 85.398% 85.398% 88.926% 88.926% 88.926% 88.926%
July 15, 2005........ 100.000% 100.000% 61.959% 85.099% 85.099% 88.614% 88.614% 88.614% 88.614%
August 15, 2005...... 100.000% 100.000% 61.036% 84.738% 84.738% 88.238% 88.238% 88.238% 88.238%
</Table>
2
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
-------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
September 15, 2005........ 100.000% 100.000% 60.109% 84.374% 84.374% 87.859% 87.859% 87.859% 87.859%
October 15, 2005.......... 100.000% 100.000% 59.328% 84.069% 84.069% 87.541% 87.541% 87.541% 87.541%
November 15, 2005......... 100.000% 100.000% 58.401% 83.705% 83.705% 87.163% 87.163% 87.163% 87.163%
December 15, 2005......... 100.000% 100.000% 57.462% 83.338% 83.338% 86.780% 86.780% 86.780% 86.780%
January 15, 2006.......... 100.000% 100.000% 56.680% 83.031% 83.031% 86.461% 86.461% 86.461% 86.461%
February 15, 2006......... 100.000% 100.000% 55.736% 82.661% 82.661% 86.076% 86.076% 86.076% 86.076%
March 15, 2006............ 100.000% 100.000% 54.775% 82.285% 82.285% 85.684% 85.684% 85.684% 85.684%
April 15, 2006............ 100.000% 100.000% 53.978% 81.973% 81.973% 85.359% 85.359% 85.359% 85.359%
May 15, 2006.............. 100.000% 100.000% 53.016% 81.596% 81.596% 84.966% 84.966% 84.966% 84.966%
June 15, 2006............. 100.000% 100.000% 52.051% 81.218% 81.218% 84.573% 84.573% 84.573% 84.573%
July 15, 2006............. 100.000% 100.000% 51.236% 80.899% 80.899% 84.240% 84.240% 84.240% 84.240%
August 15, 2006........... 100.000% 100.000% 50.261% 80.517% 80.517% 83.843% 83.843% 83.843% 83.843%
September 15, 2006........ 100.000% 100.000% 49.282% 80.133% 80.133% 83.443% 83.443% 83.443% 83.443%
October 15, 2006.......... 100.000% 100.000% 48.451% 79.808% 79.808% 83.105% 83.105% 83.105% 83.105%
November 15, 2006......... 100.000% 100.000% 47.462% 79.421% 79.421% 82.701% 82.701% 82.701% 82.701%
December 15, 2006......... 100.000% 100.000% 46.463% 79.029% 79.029% 82.294% 82.294% 82.294% 82.294%
January 15, 2007.......... 100.000% 100.000% 45.621% 78.699% 78.699% 81.950% 81.950% 81.950% 81.950%
February 15, 2007......... 100.000% 100.000% 44.616% 78.306% 78.306% 81.540% 81.540% 81.540% 81.540%
March 15, 2007............ 100.000% 100.000% 43.595% 77.906% 77.906% 81.124% 81.124% 81.124% 81.124%
April 15, 2007............ 100.000% 100.000% 42.737% 77.570% 77.570% 80.774% 80.774% 80.774% 80.774%
May 15, 2007.............. 100.000% 100.000% 41.713% 77.169% 77.169% 80.356% 80.356% 80.356% 80.356%
June 15, 2007............. 100.000% 100.000% 40.686% 76.767% 76.767% 79.937% 79.937% 79.937% 79.937%
July 15, 2007............. 100.000% 100.000% 39.809% 76.423% 76.423% 79.579% 79.579% 79.579% 79.579%
August 15, 2007........... 100.000% 100.000% 38.772% 76.017% 76.017% 79.157% 79.157% 79.157% 79.157%
September 15, 2007........ 100.000% 100.000% 37.730% 75.608% 75.608% 78.731% 78.731% 78.731% 78.731%
October 15, 2007.......... 100.000% 100.000% 36.836% 75.258% 75.258% 78.367% 78.367% 78.367% 78.367%
November 15, 2007......... 100.000% 100.000% 35.783% 74.846% 74.846% 77.937% 77.937% 77.937% 77.937%
December 15, 2007......... 100.000% 100.000% 34.716% 74.428% 74.428% 77.502% 77.502% 77.502% 77.502%
January 15, 2008.......... 100.000% 100.000% 33.805% 74.071% 74.071% 77.131% 77.131% 77.131% 77.131%
February 15, 2008......... 100.000% 100.000% 32.730% 73.650% 73.650% 76.692% 76.692% 76.692% 76.692%
March 15, 2008............ 100.000% 100.000% 31.640% 73.223% 73.223% 76.248% 76.248% 76.248% 76.248%
April 15, 2008............ 100.000% 100.000% 30.708% 72.858% 72.858% 75.867% 75.867% 75.867% 75.867%
May 15, 2008.............. 100.000% 100.000% 29.607% 72.427% 72.427% 75.418% 75.418% 75.418% 75.418%
June 15, 2008............. 100.000% 100.000% 28.505% 71.995% 71.995% 74.969% 74.969% 74.969% 74.969%
July 15, 2008............. 100.000% 100.000% 27.550% 71.621% 71.621% 74.579% 74.579% 74.579% 74.579%
August 15, 2008........... 100.000% 100.000% 26.436% 71.185% 71.185% 74.125% 74.125% 74.125% 74.125%
September 15, 2008........ 100.000% 100.000% 25.316% 70.746% 70.746% 73.668% 73.668% 73.668% 73.668%
October 15, 2008.......... 100.000% 100.000% 24.345% 70.365% 70.365% 73.272% 73.272% 73.272% 73.272%
November 15, 2008......... 100.000% 100.000% 23.213% 69.922% 69.922% 72.810% 72.810% 72.810% 72.810%
December 15, 2008......... 100.000% 100.000% 22.072% 69.475% 69.475% 72.345% 72.345% 72.345% 72.345%
January 15, 2009.......... 100.000% 100.000% 21.086% 69.089% 69.089% 71.943% 71.943% 71.943% 71.943%
February 15, 2009......... 100.000% 100.000% 19.936% 68.639% 68.639% 71.474% 71.474% 71.474% 71.474%
March 15, 2009............ 100.000% 100.000% 18.771% 68.182% 68.182% 70.999% 70.999% 70.999% 70.999%
April 15, 2009............ 100.000% 100.000% 17.767% 67.789% 67.789% 70.589% 70.589% 70.589% 70.589%
May 15, 2009.............. 100.000% 100.000% 16.596% 67.330% 67.330% 70.111% 70.111% 70.111% 70.111%
June 15, 2009............. 100.000% 100.000% 15.422% 66.870% 66.870% 69.632% 69.632% 69.632% 69.632%
July 15, 2009............. 100.000% 100.000% 14.397% 66.469% 66.469% 69.214% 69.214% 69.214% 69.214%
August 15, 2009........... 100.000% 100.000% 13.211% 66.004% 66.004% 68.731% 68.731% 68.731% 68.731%
September 15, 2009........ 100.000% 100.000% 12.020% 65.538% 65.538% 68.245% 68.245% 68.245% 68.245%
October 15, 2009.......... 100.000% 100.000% 10.976% 65.129% 65.129% 67.819% 67.819% 67.819% 67.819%
November 15, 2009......... 100.000% 100.000% 9.775% 64.658% 64.658% 67.329% 67.329% 67.329% 67.329%
December 15, 2009......... 100.000% 100.000% 8.561% 64.183% 64.183% 66.834% 66.834% 66.834% 66.834%
January 15, 2010.......... 100.000% 100.000% 7.506% 63.770% 63.770% 66.404% 66.404% 66.404% 66.404%
February 15, 2010......... 100.000% 100.000% 6.289% 63.293% 63.293% 65.907% 65.907% 65.907% 65.907%
March 15, 2010............ 100.000% 100.000% 5.038% 62.803% 62.803% 65.397% 65.397% 65.397% 65.397%
April 15, 2010............ 100.000% 100.000% 3.966% 62.383% 62.383% 64.960% 64.960% 64.960% 64.960%
</Table>
3
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
--------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
May 15, 2010............... 100.000% 100.000% 2.721% 61.895% 61.895% 64.452% 64.452% 64.452% 64.452%
June 15, 2010.............. 100.000% 100.000% 1.481% 61.410% 61.410% 63.946% 63.946% 63.946% 63.946%
July 15, 2010.............. 100.000% 100.000% 0.381% 60.979% 60.979% 63.497% 63.497% 63.497% 63.497%
August 15, 2010............ 100.000% 100.000% 0.000% 60.489% 60.489% 62.987% 62.987% 62.987% 62.987%
September 15, 2010......... 98.630% 98.630% 0.000% 59.996% 59.996% 62.474% 62.474% 62.474% 62.474%
October 15, 2010........... 97.909% 97.909% 0.000% 59.557% 59.557% 62.017% 62.017% 62.017% 62.017%
November 15, 2010.......... 97.092% 97.092% 0.000% 59.061% 59.061% 61.500% 61.500% 61.500% 61.500%
December 15, 2010.......... 96.260% 96.260% 0.000% 58.555% 58.555% 60.973% 60.973% 60.973% 60.973%
January 15, 2011........... 95.538% 95.538% 0.000% 58.115% 58.115% 60.515% 60.515% 60.515% 60.515%
February 15, 2011.......... 94.710% 94.710% 0.000% 57.611% 57.611% 59.991% 59.991% 59.991% 59.991%
March 15, 2011............. 93.841% 93.841% 0.000% 57.083% 57.083% 59.441% 59.441% 59.441% 59.441%
April 15, 2011............. 93.106% 93.106% 0.000% 56.636% 56.636% 58.975% 58.975% 58.975% 58.975%
May 15, 2011............... 92.253% 92.253% 0.000% 56.117% 56.117% 58.435% 58.435% 58.435% 58.435%
June 15, 2011.............. 91.410% 91.410% 0.000% 55.604% 55.604% 57.901% 57.901% 57.901% 57.901%
July 15, 2011.............. 90.649% 90.649% 0.000% 55.141% 55.141% 57.419% 57.419% 57.419% 57.419%
August 15, 2011............ 89.797% 89.797% 0.000% 54.623% 54.623% 56.879% 56.879% 56.879% 56.879%
September 15, 2011......... 88.940% 88.940% 0.000% 54.102% 54.102% 56.336% 56.336% 56.336% 56.336%
October 15, 2011........... 88.166% 88.166% 0.000% 53.631% 53.631% 55.846% 55.846% 55.846% 55.846%
November 15, 2011.......... 87.367% 87.367% 0.000% 53.145% 53.145% 55.340% 55.340% 55.340% 55.340%
December 15, 2011.......... 86.517% 86.517% 0.000% 52.628% 52.628% 54.802% 54.802% 54.802% 54.802%
January 15, 2012........... 85.675% 85.675% 0.000% 52.116% 52.116% 54.268% 54.268% 54.268% 54.268%
February 15, 2012.......... 84.829% 84.829% 0.000% 51.601% 51.601% 53.732% 53.732% 53.732% 53.732%
March 15, 2012............. 83.952% 83.952% 0.000% 51.067% 51.067% 53.177% 53.177% 53.177% 53.177%
April 15, 2012............. 83.096% 83.096% 0.000% 50.547% 50.547% 52.634% 52.634% 52.634% 52.634%
May 15, 2012............... 82.222% 82.222% 0.000% 50.015% 50.015% 52.081% 52.081% 52.081% 52.081%
June 15, 2012.............. 81.356% 81.356% 0.000% 49.489% 49.489% 51.533% 51.533% 51.533% 51.533%
July 15, 2012.............. 80.473% 80.473% 0.000% 48.951% 48.951% 50.973% 50.973% 50.973% 50.973%
August 15, 2012............ 79.598% 79.598% 0.000% 48.419% 48.419% 50.419% 50.419% 50.419% 50.419%
September 15, 2012......... 78.717% 78.717% 0.000% 47.883% 47.883% 49.861% 49.861% 49.861% 49.861%
October 15, 2012........... 77.820% 77.820% 0.000% 47.337% 47.337% 49.293% 49.293% 49.293% 49.293%
November 15, 2012.......... 76.929% 76.929% 0.000% 46.796% 46.796% 48.729% 48.729% 48.729% 48.729%
December 15, 2012.......... 76.022% 76.022% 0.000% 46.244% 46.244% 48.154% 48.154% 48.154% 48.154%
January 15, 2013........... 75.120% 75.120% 0.000% 45.695% 45.695% 47.583% 47.583% 47.583% 47.583%
February 15, 2013.......... 74.214% 74.214% 0.000% 45.144% 45.144% 47.009% 47.009% 47.009% 47.009%
March 15, 2013............. 73.269% 73.269% 0.000% 44.569% 44.569% 46.410% 46.410% 46.410% 46.410%
April 15, 2013............. 72.354% 72.354% 0.000% 44.012% 44.012% 45.830% 45.830% 45.830% 45.830%
May 15, 2013............... 71.422% 71.422% 0.000% 43.446% 43.446% 45.240% 45.240% 45.240% 45.240%
June 15, 2013.............. 70.500% 70.500% 0.000% 42.885% 42.885% 44.656% 44.656% 44.656% 44.656%
July 15, 2013.............. 69.562% 69.562% 0.000% 42.314% 42.314% 44.062% 44.062% 44.062% 44.062%
August 15, 2013............ 68.630% 68.630% 0.000% 41.747% 41.747% 43.472% 43.472% 43.472% 43.472%
September 15, 2013......... 67.692% 67.692% 0.000% 41.177% 41.177% 42.878% 42.878% 42.878% 42.878%
October 15, 2013........... 66.739% 66.739% 0.000% 40.597% 40.597% 42.274% 42.274% 42.274% 42.274%
November 15, 2013.......... 65.795% 65.795% 0.000% 40.023% 40.023% 41.676% 41.676% 41.676% 41.676%
December 15, 2013.......... 64.836% 64.836% 0.000% 39.440% 39.440% 41.069% 41.069% 41.069% 41.069%
January 15, 2014........... 63.887% 63.887% 0.000% 38.862% 38.862% 40.467% 40.467% 40.467% 40.467%
February 15, 2014.......... 62.932% 62.932% 0.000% 38.281% 38.281% 39.862% 39.862% 39.862% 39.862%
March 15, 2014............. 61.943% 61.943% 0.000% 37.679% 37.679% 39.236% 39.236% 39.236% 39.236%
April 15, 2014............. 60.977% 60.977% 0.000% 37.092% 37.092% 38.624% 38.624% 38.624% 38.624%
May 15, 2014............... 59.996% 59.996% 0.000% 36.496% 36.496% 38.003% 38.003% 38.003% 38.003%
June 15, 2014.............. 59.020% 59.020% 0.000% 35.901% 35.901% 37.384% 37.384% 37.384% 37.384%
July 15, 2014.............. 58.028% 58.028% 0.000% 35.298% 35.298% 36.756% 36.756% 36.756% 36.756%
August 15, 2014............ 57.044% 57.044% 0.000% 34.700% 34.700% 36.133% 36.133% 36.133% 36.133%
September 15, 2014......... 56.055% 56.055% 0.000% 34.098% 34.098% 35.506% 35.506% 35.506% 35.506%
October 15, 2014........... 55.051% 55.051% 0.000% 33.487% 33.487% 34.871% 34.871% 34.871% 34.871%
November 15, 2014.......... 54.051% 54.051% 0.000% 32.879% 32.879% 34.237% 34.237% 34.237% 34.237%
</Table>
4
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
----------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
December 15, 2014............ 53.036% 53.036% 0.000% 32.261% 32.261% 33.594% 33.594% 33.594% 33.594%
January 15, 2015............. 52.029% 52.029% 0.000% 31.649% 31.649% 32.956% 32.956% 32.956% 32.956%
February 15, 2015............ 51.016% 51.016% 0.000% 31.033% 31.033% 32.315% 32.315% 32.314% 32.314%
March 15, 2015............... 49.974% 49.974% 0.000% 30.399% 30.399% 31.654% 31.654% 31.654% 31.654%
April 15, 2015............... 48.949% 48.949% 0.000% 29.776% 29.776% 31.006% 31.006% 31.006% 31.006%
May 15, 2015................. 47.915% 47.915% 0.000% 29.146% 29.146% 30.350% 30.350% 30.350% 30.350%
June 15, 2015................ 46.881% 46.881% 0.000% 28.518% 28.518% 29.696% 29.696% 29.696% 29.696%
July 15, 2015................ 45.835% 45.835% 0.000% 27.881% 27.881% 29.033% 29.033% 29.033% 29.033%
August 15, 2015.............. 44.791% 44.791% 0.000% 27.246% 27.246% 28.371% 28.371% 28.371% 28.371%
September 15, 2015........... 43.740% 43.740% 0.000% 26.607% 26.607% 27.706% 27.706% 27.706% 27.706%
October 15, 2015............. 42.677% 42.677% 0.000% 25.960% 25.960% 27.032% 27.032% 27.032% 27.032%
November 15, 2015............ 41.614% 41.614% 0.000% 25.314% 25.314% 26.359% 26.359% 26.359% 26.359%
December 15, 2015............ 40.539% 40.539% 0.000% 24.660% 24.660% 25.678% 25.678% 25.678% 25.678%
January 15, 2016............. 39.465% 39.465% 0.000% 24.007% 24.007% 24.998% 24.998% 24.998% 24.998%
February 15, 2016............ 38.386% 38.386% 0.000% 23.350% 23.350% 24.315% 24.315% 24.315% 24.315%
March 15, 2016............... 37.289% 37.289% 0.000% 22.683% 22.683% 23.620% 23.620% 23.620% 23.620%
April 15, 2016............... 36.198% 36.198% 0.000% 22.019% 22.019% 22.929% 22.929% 22.929% 22.929%
May 15, 2016................. 35.098% 35.098% 0.000% 21.350% 21.350% 22.232% 22.232% 22.232% 22.232%
June 15, 2016................ 33.998% 33.998% 0.000% 20.681% 20.681% 21.535% 21.535% 21.535% 21.535%
July 15, 2016................ 32.890% 32.890% 0.000% 20.007% 20.007% 20.833% 20.833% 20.833% 20.833%
August 15, 2016.............. 31.781% 31.781% 0.000% 19.332% 19.332% 20.131% 20.131% 20.131% 20.131%
September 15, 2016........... 30.666% 30.666% 0.000% 18.654% 18.654% 19.424% 19.424% 19.424% 19.424%
October 15, 2016............. 29.540% 29.540% 0.000% 17.969% 17.969% 18.711% 18.711% 18.711% 18.711%
November 15, 2016............ 28.412% 28.412% 0.000% 17.283% 17.283% 17.997% 17.997% 17.997% 17.997%
December 15, 2016............ 27.289% 27.289% 0.000% 16.600% 16.600% 17.285% 17.285% 17.285% 17.285%
January 15, 2017............. 26.164% 26.164% 0.000% 15.915% 15.915% 16.573% 16.573% 16.573% 16.573%
February 15, 2017............ 25.032% 25.032% 0.000% 15.227% 15.227% 15.856% 15.856% 15.856% 15.856%
March 15, 2017............... 23.883% 23.883% 0.000% 14.528% 14.528% 15.128% 15.128% 15.128% 15.128%
April 15, 2017............... 22.739% 22.739% 0.000% 13.832% 13.832% 14.403% 14.403% 14.403% 14.403%
May 15, 2017................. 21.585% 21.585% 0.000% 13.130% 13.130% 13.672% 13.672% 13.672% 13.672%
June 15, 2017................ 20.428% 20.428% 0.000% 12.426% 12.426% 12.939% 12.939% 12.939% 12.939%
July 15, 2017................ 19.261% 19.261% 0.000% 11.716% 11.716% 12.200% 12.200% 12.200% 12.200%
August 15, 2017.............. 18.091% 18.091% 0.000% 11.005% 11.005% 11.459% 11.459% 11.459% 11.459%
September 15, 2017........... 16.944% 16.944% 0.000% 10.307% 10.307% 10.733% 10.733% 10.733% 10.733%
October 15, 2017............. 15.788% 15.788% 0.000% 9.604% 9.604% 10.000% 10.000% 10.000% 10.000%
November 15, 2017............ 14.658% 14.658% 0.000% 8.916% 8.916% 9.284% 9.284% 9.284% 9.284%
December 15, 2017............ 13.519% 13.519% 0.000% 8.223% 8.223% 8.563% 8.563% 8.563% 8.563%
January 15, 2018............. 12.376% 12.376% 0.000% 7.528% 7.528% 7.839% 7.839% 7.839% 7.839%
February 15, 2018............ 11.226% 11.226% 0.000% 6.829% 6.829% 7.111% 7.111% 7.111% 7.111%
March 15, 2018............... 10.065% 10.065% 0.000% 6.123% 6.123% 6.375% 6.375% 6.375% 6.375%
April 15, 2018............... 8.928% 8.928% 0.000% 5.431% 5.431% 5.655% 5.655% 5.655% 5.655%
May 15, 2018................. 7.789% 7.789% 0.000% 4.738% 4.738% 4.934% 4.934% 4.934% 4.934%
June 15, 2018................ 6.675% 6.675% 0.000% 4.060% 4.060% 4.228% 4.228% 4.228% 4.228%
July 15, 2018................ 5.561% 5.561% 0.000% 3.383% 3.383% 3.523% 3.523% 3.523% 3.523%
August 15, 2018.............. 4.442% 4.442% 0.000% 2.702% 2.702% 2.814% 2.814% 2.814% 2.814%
September 15, 2018........... 3.317% 3.317% 0.000% 2.018% 2.018% 2.101% 2.101% 2.101% 2.101%
October 15, 2018............. 2.190% 2.190% 0.000% 1.332% 1.332% 1.387% 1.387% 1.387% 1.387%
November 15, 2018............ 1.056% 1.056% 0.000% 0.643% 0.643% 0.669% 0.669% 0.669% 0.669%
December 15, 2018............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2019............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2019............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2019............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2019............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2019................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2019................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2019................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
</Table>
5
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
August 15, 2019................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2019............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2019............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2019.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2019.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2020............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2020.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2020................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2020................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2020................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2020.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2020.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2020................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2020............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2020............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2020.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2020.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2021............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2021.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2021................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2021................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2021................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2021.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2021.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2021................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2021............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2021............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2021.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2021.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2022............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2022.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2022................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2022................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2022................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2022.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2022.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2022................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2022............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2022............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2022.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2022.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2023............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2023.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2023................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2023................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2023................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2023.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2023.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2023................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2023............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2023............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2023.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2023.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2024............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2024.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
</Table>
6
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
March 15, 2024................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2024................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2024................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2024.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2024.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2024................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2024............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2024............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2024.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2024.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2025............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2025.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2025................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2025................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2025................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2025.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2025.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2025................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2025............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2025............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2025.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2025.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2026............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2026.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2026................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2026................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2026................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2026.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2026.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2026................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2026............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2026............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2026.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2026.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2027............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2027.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2027................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2027................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2027................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2027.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2027.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2027................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2027............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2027............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2027.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2027.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2028............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2028.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2028................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2028................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2028................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2028.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2028.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
</Table>
7
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
August 15, 2028................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2028............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2028............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2028.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2028.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2029............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2029.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2029................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2029................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2029................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2029.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2029.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2029................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2029............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2029............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2029.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2029.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2030............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2030.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2030................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2030................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2030................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2030.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2030.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2030................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2030............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2030............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2030.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2030.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2031............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2031.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2031................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2031................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2031................... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2031.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2031.................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
</Table>
8
<Page>
APPENDIX 7
The "Extended Pool Factors" contained in the following Appendix 7 represent
percentages to be incorporated in the calculations found on page under
"Description of the Notes--Priority of Payments--Allocation of Principal Among
Subclasses of Notes." Those calculations are used to determine, in the case of
insufficient funds to make a principal payment to all subclasses of a series of
notes, the basis on which the available funds are allocated among the
subclasses.
1
<Page>
APPENDIX 7
EXTENDED POOL FACTORS
The following are the Extended Pool Factors as of June 26, 2001. These
Extended Pool Factors may be changed by a resolution of the Controlling Trustees
in connection with a refinancing of the notes or the acquisition of additional
aircraft.
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------ -------- -------- -------- -------- -------- -------- -------- -------- --------
Closing Date................. 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000%
July 15, 2001................ 100.000% 100.000% 98.758% 99.511% 99.511% 100.000% 100.000% 100.000% 100.000%
August 15, 2001.............. 100.000% 100.000% 98.052% 99.234% 99.234% 100.000% 100.000% 100.000% 100.000%
September 15, 2001........... 100.000% 100.000% 97.074% 98.849% 98.849% 100.000% 100.000% 100.000% 100.000%
October 15, 2001............. 100.000% 100.000% 96.547% 98.642% 98.642% 100.000% 100.000% 100.000% 100.000%
November 15, 2001............ 100.000% 100.000% 95.884% 98.381% 98.381% 100.000% 100.000% 100.000% 100.000%
December 15, 2001............ 100.000% 100.000% 94.954% 98.016% 98.016% 100.000% 100.000% 100.000% 100.000%
January 15, 2002............. 100.000% 100.000% 94.463% 97.822% 97.822% 100.000% 100.000% 100.000% 100.000%
February 15, 2002............ 100.000% 100.000% 93.789% 97.557% 97.557% 100.000% 100.000% 100.000% 100.000%
March 15, 2002............... 100.000% 100.000% 92.825% 97.178% 97.178% 100.000% 100.000% 100.000% 100.000%
April 15, 2002............... 100.000% 100.000% 92.298% 96.971% 96.971% 100.000% 100.000% 100.000% 100.000%
May 15, 2002................. 100.000% 100.000% 91.541% 96.674% 96.674% 100.000% 100.000% 100.000% 100.000%
June 15, 2002................ 100.000% 100.000% 90.518% 96.271% 96.271% 100.000% 100.000% 100.000% 100.000%
July 15, 2002................ 100.000% 100.000% 90.025% 96.074% 96.074% 99.795% 99.795% 99.795% 99.795%
August 15, 2002.............. 100.000% 100.000% 89.382% 95.818% 95.818% 99.528% 99.528% 99.529% 99.529%
September 15, 2002........... 100.000% 100.000% 88.510% 95.470% 95.470% 99.165% 99.165% 99.167% 99.167%
October 15, 2002............. 100.000% 100.000% 88.022% 95.275% 95.275% 98.962% 98.962% 98.964% 98.964%
November 15, 2002............ 100.000% 100.000% 87.408% 95.030% 95.030% 98.706% 98.706% 98.709% 98.709%
December 15, 2002............ 100.000% 100.000% 86.560% 94.691% 94.691% 98.353% 98.353% 98.357% 98.357%
January 15, 2003............. 100.000% 100.000% 86.090% 94.504% 94.504% 98.158% 98.158% 98.162% 98.162%
February 15, 2003............ 100.000% 100.000% 85.487% 94.263% 94.263% 97.907% 97.907% 97.912% 97.912%
March 15, 2003............... 100.000% 100.000% 84.672% 93.938% 93.938% 97.568% 97.568% 97.574% 97.574%
April 15, 2003............... 100.000% 100.000% 84.142% 93.726% 93.726% 97.347% 97.347% 97.354% 97.354%
May 15, 2003................. 100.000% 100.000% 83.431% 93.442% 93.442% 97.052% 97.052% 97.059% 97.059%
June 15, 2003................ 100.000% 100.000% 82.572% 93.100% 93.100% 96.695% 96.695% 96.703% 96.703%
July 15, 2003................ 100.000% 100.000% 82.351% 93.009% 93.009% 96.600% 96.600% 96.610% 96.610%
August 15, 2003.............. 100.000% 100.000% 81.649% 92.719% 92.719% 96.299% 96.299% 96.314% 96.314%
September 15, 2003........... 100.000% 100.000% 80.892% 92.407% 92.407% 95.975% 95.975% 95.995% 95.995%
October 15, 2003............. 100.000% 100.000% 80.295% 92.160% 92.160% 95.719% 95.719% 95.744% 95.744%
November 15, 2003............ 100.000% 100.000% 79.569% 91.861% 91.861% 95.408% 95.408% 95.438% 95.438%
December 15, 2003............ 100.000% 100.000% 78.834% 91.558% 91.558% 95.093% 95.093% 95.128% 95.128%
January 15, 2004............. 100.000% 100.000% 78.250% 91.317% 91.317% 94.843% 94.843% 94.882% 94.882%
February 15, 2004............ 100.000% 100.000% 77.512% 91.013% 91.013% 94.527% 94.527% 94.572% 94.572%
March 15, 2004............... 100.000% 100.000% 76.762% 90.703% 90.703% 94.206% 94.206% 94.256% 94.256%
April 15, 2004............... 100.000% 100.000% 76.162% 90.456% 90.456% 93.949% 93.949% 94.003% 94.003%
May 15, 2004................. 100.000% 100.000% 75.381% 90.134% 90.134% 93.615% 93.615% 93.675% 93.675%
June 15, 2004................ 100.000% 100.000% 74.602% 89.813% 89.813% 93.281% 93.281% 93.347% 93.347%
July 15, 2004................ 100.000% 100.000% 74.192% 89.629% 89.629% 93.092% 93.092% 93.170% 93.170%
August 15, 2004.............. 100.000% 100.000% 73.426% 89.286% 89.286% 92.740% 92.740% 92.839% 92.839%
September 15, 2004........... 100.000% 100.000% 72.656% 88.940% 88.940% 92.385% 92.385% 92.507% 92.507%
October 15, 2004............. 100.000% 100.000% 72.023% 88.657% 88.657% 92.094% 92.094% 92.233% 92.233%
November 15, 2004............ 100.000% 100.000% 71.268% 88.318% 88.318% 91.746% 91.746% 91.907% 91.907%
December 15, 2004............ 100.000% 100.000% 70.503% 87.976% 87.976% 91.395% 91.395% 91.577% 91.577%
January 15, 2005............. 100.000% 100.000% 69.885% 87.699% 87.699% 91.110% 91.110% 91.311% 91.311%
February 15, 2005............ 100.000% 100.000% 69.118% 87.356% 87.356% 90.758% 90.758% 90.980% 90.980%
March 15, 2005............... 100.000% 100.000% 68.333% 87.005% 87.005% 90.397% 90.397% 90.641% 90.641%
April 15, 2005............... 100.000% 100.000% 67.727% 86.734% 86.734% 90.119% 90.119% 90.380% 90.380%
May 15, 2005................. 100.000% 100.000% 66.922% 86.374% 86.374% 89.750% 89.750% 90.033% 90.033%
June 15, 2005................ 100.000% 100.000% 66.116% 86.014% 86.014% 89.380% 89.380% 89.686% 89.686%
July 15, 2005................ 100.000% 100.000% 65.462% 85.716% 85.716% 89.072% 89.072% 89.397% 89.397%
August 15, 2005.............. 100.000% 100.000% 64.666% 85.353% 85.353% 88.698% 88.698% 89.047% 89.047%
</Table>
2
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------ -------- -------- -------- -------- -------- -------- -------- -------- --------
September 15, 2005........... 100.000% 100.000% 63.866% 84.989% 84.989% 88.322% 88.322% 88.695% 88.695%
October 15, 2005............. 100.000% 100.000% 63.198% 84.684% 84.684% 88.008% 88.008% 88.401% 88.401%
November 15, 2005............ 100.000% 100.000% 62.398% 84.321% 84.321% 87.632% 87.632% 88.049% 88.049%
December 15, 2005............ 100.000% 100.000% 61.588% 83.952% 83.952% 87.252% 87.252% 87.693% 87.693%
January 15, 2006............. 100.000% 100.000% 60.920% 83.649% 83.649% 86.939% 86.939% 87.400% 87.400%
February 15, 2006............ 100.000% 100.000% 60.106% 83.279% 83.279% 86.557% 86.557% 87.042% 87.042%
March 15, 2006............... 100.000% 100.000% 59.274% 82.902% 82.902% 86.168% 86.168% 86.677% 86.677%
April 15, 2006............... 100.000% 100.000% 58.594% 82.593% 82.593% 85.849% 85.849% 86.378% 86.378%
May 15, 2006................. 100.000% 100.000% 57.763% 82.216% 82.216% 85.461% 85.461% 86.013% 86.013%
June 15, 2006................ 100.000% 100.000% 56.932% 81.840% 81.840% 85.072% 85.072% 85.649% 85.649%
July 15, 2006................ 100.000% 100.000% 56.231% 81.530% 81.530% 84.752% 84.752% 85.337% 85.337%
August 15, 2006.............. 100.000% 100.000% 55.388% 81.158% 81.158% 84.366% 84.366% 84.961% 84.961%
September 15, 2006........... 100.000% 100.000% 54.539% 80.783% 80.783% 83.979% 83.979% 84.584% 84.584%
October 15, 2006............. 100.000% 100.000% 53.826% 80.468% 80.468% 83.653% 83.653% 84.267% 84.267%
November 15, 2006............ 100.000% 100.000% 52.969% 80.090% 80.090% 83.262% 83.262% 83.886% 83.886%
December 15, 2006............ 100.000% 100.000% 52.103% 79.709% 79.709% 82.867% 82.867% 83.502% 83.502%
January 15, 2007............. 100.000% 100.000% 51.381% 79.391% 79.391% 82.538% 82.538% 83.181% 83.181%
February 15, 2007............ 100.000% 100.000% 50.511% 79.008% 79.008% 82.142% 82.142% 82.795% 82.795%
March 15, 2007............... 100.000% 100.000% 49.623% 78.617% 78.617% 81.737% 81.737% 82.401% 82.401%
April 15, 2007............... 100.000% 100.000% 48.887% 78.294% 78.294% 81.403% 81.403% 82.075% 82.075%
May 15, 2007................. 100.000% 100.000% 48.000% 77.904% 77.904% 80.999% 80.999% 81.681% 81.681%
June 15, 2007................ 100.000% 100.000% 47.111% 77.514% 77.514% 80.596% 80.596% 81.288% 81.288%
July 15, 2007................ 100.000% 100.000% 46.370% 77.186% 77.186% 80.253% 80.253% 80.954% 80.954%
August 15, 2007.............. 100.000% 100.000% 45.488% 76.796% 76.796% 79.846% 79.846% 80.557% 80.557%
September 15, 2007........... 100.000% 100.000% 44.601% 76.405% 76.405% 79.437% 79.437% 80.158% 80.158%
October 15, 2007............. 100.000% 100.000% 43.846% 76.072% 76.072% 79.090% 79.090% 79.819% 79.819%
November 15, 2007............ 100.000% 100.000% 42.950% 75.677% 75.677% 78.677% 78.677% 79.417% 79.417%
December 15, 2007............ 100.000% 100.000% 42.041% 75.277% 75.277% 78.259% 78.259% 79.008% 79.008%
January 15, 2008............. 100.000% 100.000% 41.274% 74.939% 74.939% 77.906% 77.906% 78.664% 78.664%
February 15, 2008............ 100.000% 100.000% 40.360% 74.537% 74.537% 77.486% 77.486% 78.254% 78.254%
March 15, 2008............... 100.000% 100.000% 39.429% 74.128% 74.128% 77.059% 77.059% 77.837% 77.837%
April 15, 2008............... 100.000% 100.000% 38.644% 73.783% 73.783% 76.699% 76.699% 77.485% 77.485%
May 15, 2008................. 100.000% 100.000% 37.706% 73.371% 73.371% 76.269% 76.269% 77.065% 77.065%
June 15, 2008................ 100.000% 100.000% 36.769% 72.960% 72.960% 75.839% 75.839% 76.645% 76.645%
July 15, 2008................ 100.000% 100.000% 35.977% 72.606% 72.606% 75.465% 75.465% 76.285% 76.285%
August 15, 2008.............. 100.000% 100.000% 35.045% 72.189% 72.189% 75.026% 75.026% 75.862% 75.862%
September 15, 2008........... 100.000% 100.000% 34.109% 71.770% 71.770% 74.585% 74.585% 75.436% 75.436%
October 15, 2008............. 100.000% 100.000% 33.303% 71.410% 71.410% 74.205% 74.205% 75.071% 75.071%
November 15, 2008............ 100.000% 100.000% 32.357% 70.988% 70.988% 73.760% 73.760% 74.642% 74.642%
December 15, 2008............ 100.000% 100.000% 31.402% 70.562% 70.562% 73.311% 73.311% 74.209% 74.209%
January 15, 2009............. 100.000% 100.000% 30.586% 70.199% 70.199% 72.928% 72.928% 73.839% 73.839%
February 15, 2009............ 100.000% 100.000% 29.626% 69.771% 69.771% 72.478% 72.478% 73.404% 73.404%
March 15, 2009............... 100.000% 100.000% 28.648% 69.336% 69.336% 72.020% 72.020% 72.962% 72.962%
April 15, 2009............... 100.000% 100.000% 27.817% 68.967% 68.967% 71.631% 71.631% 72.586% 72.586%
May 15, 2009................. 100.000% 100.000% 26.837% 68.532% 68.532% 71.173% 71.173% 72.144% 72.144%
June 15, 2009................ 100.000% 100.000% 25.857% 68.097% 68.097% 70.715% 70.715% 71.701% 71.701%
July 15, 2009................ 100.000% 100.000% 25.026% 67.708% 67.708% 70.303% 70.303% 71.318% 71.318%
August 15, 2009.............. 100.000% 100.000% 24.059% 67.256% 67.256% 69.825% 69.825% 70.872% 70.872%
September 15, 2009........... 100.000% 100.000% 23.088% 66.802% 66.802% 69.345% 69.345% 70.424% 70.424%
October 15, 2009............. 100.000% 100.000% 22.242% 66.407% 66.407% 68.928% 68.928% 70.035% 70.035%
November 15, 2009............ 100.000% 100.000% 21.262% 65.951% 65.951% 68.445% 68.445% 69.585% 69.585%
December 15, 2009............ 100.000% 100.000% 20.270% 65.489% 65.489% 67.957% 67.957% 69.129% 69.129%
January 15, 2010............. 100.000% 100.000% 19.418% 65.093% 65.093% 67.539% 67.539% 68.738% 68.738%
February 15, 2010............ 100.000% 100.000% 18.426% 64.633% 64.633% 67.053% 67.053% 68.283% 68.283%
</Table>
3
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------ -------- -------- -------- -------- -------- -------- -------- -------- --------
March 15, 2010............... 100.000% 100.000% 17.398% 64.157% 64.157% 66.550% 66.550% 67.812% 67.812%
April 15, 2010............... 100.000% 100.000% 16.534% 63.756% 63.756% 66.127% 66.127% 67.416% 67.416%
May 15, 2010................. 100.000% 100.000% 15.516% 63.286% 63.286% 65.630% 65.630% 66.951% 66.951%
June 15, 2010................ 100.000% 100.000% 14.506% 62.820% 62.820% 65.138% 65.138% 66.489% 66.489%
July 15, 2010................ 100.000% 100.000% 13.640% 62.406% 62.406% 64.704% 64.704% 66.082% 66.082%
August 15, 2010.............. 100.000% 100.000% 12.650% 61.932% 61.932% 64.209% 64.209% 65.618% 65.618%
September 15, 2010........... 100.000% 100.000% 11.656% 61.458% 61.458% 63.712% 63.712% 65.151% 65.151%
October 15, 2010............. 100.000% 100.000% 10.775% 61.038% 61.038% 63.273% 63.273% 64.739% 64.739%
November 15, 2010............ 100.000% 100.000% 9.772% 60.561% 60.561% 62.774% 62.774% 64.270% 64.270%
December 15, 2010............ 100.000% 100.000% 8.748% 60.075% 60.075% 62.266% 62.266% 63.791% 63.791%
January 15, 2011............. 100.000% 100.000% 7.869% 59.658% 59.658% 61.830% 61.830% 63.381% 63.381%
February 15, 2011............ 100.000% 100.000% 6.852% 59.177% 59.177% 61.327% 61.327% 62.907% 62.907%
March 15, 2011............... 100.000% 100.000% 5.775% 58.668% 58.668% 60.795% 60.795% 62.406% 62.406%
April 15, 2011............... 100.000% 100.000% 4.883% 58.248% 58.248% 60.355% 60.355% 61.991% 61.991%
May 15, 2011................. 100.000% 100.000% 3.832% 57.753% 57.753% 59.838% 59.838% 61.503% 61.503%
June 15, 2011................ 100.000% 100.000% 2.797% 57.267% 57.267% 59.330% 59.330% 61.023% 61.023%
July 15, 2011................ 100.000% 100.000% 1.891% 56.852% 56.852% 58.900% 58.900% 60.593% 60.593%
August 15, 2011.............. 100.000% 100.000% 0.870% 56.385% 56.385% 58.416% 58.416% 60.109% 60.109%
September 15, 2011........... 100.000% 100.000% 0.000% 55.916% 55.916% 57.930% 57.930% 59.624% 59.624%
October 15, 2011............. 99.306% 99.306% 0.000% 55.496% 55.496% 57.495% 57.495% 59.189% 59.189%
November 15, 2011............ 98.694% 98.694% 0.000% 55.063% 55.063% 57.047% 57.047% 58.741% 58.741%
December 15, 2011............ 98.039% 98.039% 0.000% 54.600% 54.600% 56.567% 56.567% 58.261% 58.261%
January 15, 2012............. 97.392% 97.392% 0.000% 54.145% 54.145% 56.095% 56.095% 57.789% 57.789%
February 15, 2012............ 96.742% 96.742% 0.000% 53.688% 53.688% 55.622% 55.622% 57.315% 57.315%
March 15, 2012............... 96.064% 96.064% 0.000% 53.212% 53.212% 55.128% 55.128% 56.821% 56.821%
April 15, 2012............... 95.407% 95.407% 0.000% 52.751% 52.751% 54.651% 54.651% 56.343% 56.343%
May 15, 2012................. 94.734% 94.734% 0.000% 52.281% 52.281% 54.164% 54.164% 55.855% 55.855%
June 15, 2012................ 94.070% 94.070% 0.000% 51.817% 51.817% 53.683% 53.683% 55.374% 55.374%
July 15, 2012................ 93.398% 93.398% 0.000% 51.343% 51.343% 53.183% 53.183% 54.877% 54.877%
August 15, 2012.............. 92.735% 92.735% 0.000% 50.876% 50.876% 52.690% 52.690% 54.388% 54.388%
September 15, 2012........... 92.068% 92.068% 0.000% 50.408% 50.408% 52.196% 52.196% 53.896% 53.896%
October 15, 2012............. 91.385% 91.385% 0.000% 49.929% 49.929% 51.691% 51.691% 53.395% 53.395%
November 15, 2012............ 90.711% 90.711% 0.000% 49.458% 49.458% 51.193% 51.193% 52.900% 52.900%
December 15, 2012............ 90.021% 90.021% 0.000% 48.976% 48.976% 50.685% 50.685% 52.394% 52.394%
January 15, 2013............. 89.339% 89.339% 0.000% 48.501% 48.501% 50.184% 50.184% 51.896% 51.896%
February 15, 2013............ 88.653% 88.653% 0.000% 48.024% 48.024% 49.682% 49.682% 51.395% 51.395%
March 15, 2013............... 87.930% 87.930% 0.000% 47.522% 47.522% 49.152% 49.152% 50.868% 50.868%
April 15, 2013............... 87.238% 87.238% 0.000% 47.043% 47.043% 48.648% 48.648% 50.365% 50.365%
May 15, 2013................. 86.531% 86.531% 0.000% 46.555% 46.555% 48.133% 48.133% 49.853% 49.853%
June 15, 2013................ 85.834% 85.834% 0.000% 46.075% 46.075% 47.627% 47.627% 49.348% 49.348%
July 15, 2013................ 85.131% 85.131% 0.000% 45.588% 45.588% 47.114% 47.114% 48.837% 48.837%
August 15, 2013.............. 84.435% 84.435% 0.000% 45.107% 45.107% 46.608% 46.608% 48.332% 48.332%
September 15, 2013........... 83.735% 83.735% 0.000% 44.625% 44.625% 46.100% 46.100% 47.825% 47.825%
October 15, 2013............. 83.021% 83.021% 0.000% 44.134% 44.134% 45.583% 45.583% 47.309% 47.309%
November 15, 2013............ 82.317% 82.317% 0.000% 43.651% 43.651% 45.075% 45.075% 46.801% 46.801%
December 15, 2013............ 81.599% 81.599% 0.000% 43.160% 43.160% 44.558% 44.558% 46.285% 46.285%
January 15, 2014............. 80.892% 80.892% 0.000% 42.677% 42.677% 44.050% 44.050% 45.777% 45.777%
February 15, 2014............ 80.180% 80.180% 0.000% 42.193% 42.193% 43.541% 43.541% 45.268% 45.268%
March 15, 2014............... 79.435% 79.435% 0.000% 41.687% 41.687% 43.009% 43.009% 44.735% 44.735%
April 15, 2014............... 78.716% 78.716% 0.000% 41.200% 41.200% 42.497% 42.497% 44.222% 44.222%
May 15, 2014................. 77.982% 77.982% 0.000% 40.705% 40.705% 41.976% 41.976% 43.701% 43.701%
June 15, 2014................ 77.255% 77.255% 0.000% 40.215% 40.215% 41.462% 41.462% 43.185% 43.185%
July 15, 2014................ 76.523% 76.523% 0.000% 39.720% 39.720% 40.941% 40.941% 42.649% 42.649%
August 15, 2014.............. 75.800% 75.800% 0.000% 39.232% 39.232% 40.429% 40.429% 42.120% 42.120%
</Table>
4
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------ -------- -------- -------- -------- -------- -------- -------- -------- --------
September 15, 2014........... 75.073% 75.073% 0.000% 38.743% 38.743% 39.915% 39.915% 41.589% 41.589%
October 15, 2014............. 74.333% 74.333% 0.000% 38.246% 38.246% 39.393% 39.393% 41.051% 41.051%
November 15, 2014............ 73.598% 73.598% 0.000% 37.754% 37.754% 38.877% 38.877% 40.518% 40.518%
December 15, 2014............ 72.849% 72.849% 0.000% 37.255% 37.255% 38.353% 38.353% 39.977% 39.977%
January 15, 2015............. 72.110% 72.110% 0.000% 36.764% 36.764% 37.838% 37.838% 39.445% 39.445%
February 15, 2015............ 71.367% 71.367% 0.000% 36.271% 36.271% 37.321% 37.321% 38.911% 38.911%
March 15, 2015............... 70.593% 70.593% 0.000% 35.760% 35.760% 36.784% 36.784% 38.357% 38.357%
April 15, 2015............... 69.841% 69.841% 0.000% 35.265% 35.265% 36.265% 36.265% 37.821% 37.821%
May 15, 2015................. 69.078% 69.078% 0.000% 34.764% 34.764% 35.741% 35.741% 37.279% 37.279%
June 15, 2015................ 68.321% 68.321% 0.000% 34.268% 34.268% 35.221% 35.221% 36.742% 36.742%
July 15, 2015................ 67.589% 67.589% 0.000% 33.768% 33.768% 34.700% 34.700% 36.199% 36.199%
August 15, 2015.............. 66.861% 66.861% 0.000% 33.273% 33.273% 34.183% 34.183% 35.660% 35.660%
September 15, 2015........... 66.129% 66.129% 0.000% 32.777% 32.777% 33.667% 33.667% 35.121% 35.121%
October 15, 2015............. 65.385% 65.385% 0.000% 32.275% 32.275% 33.143% 33.143% 34.575% 34.575%
November 15, 2015............ 64.645% 64.645% 0.000% 31.778% 31.778% 32.625% 32.625% 34.034% 34.034%
December 15, 2015............ 63.893% 63.893% 0.000% 31.274% 31.274% 32.101% 32.101% 33.487% 33.487%
January 15, 2016............. 63.145% 63.145% 0.000% 30.776% 30.776% 31.582% 31.582% 32.946% 32.946%
February 15, 2016............ 62.394% 62.394% 0.000% 30.277% 30.277% 31.063% 31.063% 32.404% 32.404%
March 15, 2016............... 61.624% 61.624% 0.000% 29.768% 29.768% 30.533% 30.533% 31.852% 31.852%
April 15, 2016............... 60.864% 60.864% 0.000% 29.269% 29.269% 30.013% 30.013% 31.309% 31.309%
May 15, 2016................. 60.096% 60.096% 0.000% 28.765% 28.765% 29.489% 29.489% 30.763% 30.763%
June 15, 2016................ 59.330% 59.330% 0.000% 28.266% 28.266% 28.970% 28.970% 30.221% 30.221%
July 15, 2016................ 58.607% 58.607% 0.000% 27.756% 27.756% 28.438% 28.438% 29.666% 29.666%
August 15, 2016.............. 57.886% 57.886% 0.000% 27.252% 27.252% 27.911% 27.911% 29.117% 29.117%
September 15, 2016........... 57.162% 57.162% 0.000% 26.747% 26.747% 27.385% 27.385% 28.567% 28.567%
October 15, 2016............. 56.426% 56.426% 0.000% 26.239% 26.239% 26.854% 26.854% 28.014% 28.014%
November 15, 2016............ 55.694% 55.694% 0.000% 25.735% 25.735% 26.328% 26.328% 27.465% 27.465%
December 15, 2016............ 54.962% 54.962% 0.000% 25.234% 25.234% 25.807% 25.807% 26.921% 26.921%
January 15, 2017............. 54.232% 54.232% 0.000% 24.739% 24.739% 25.290% 25.290% 26.382% 26.382%
February 15, 2017............ 53.497% 53.497% 0.000% 24.243% 24.243% 24.774% 24.774% 25.844% 25.844%
March 15, 2017............... 52.741% 52.741% 0.000% 23.737% 23.737% 24.246% 24.246% 25.294% 25.294%
April 15, 2017............... 51.998% 51.998% 0.000% 23.242% 23.242% 23.732% 23.732% 24.757% 24.757%
May 15, 2017................. 51.246% 51.246% 0.000% 22.745% 22.745% 23.214% 23.214% 24.217% 24.217%
June 15, 2017................ 50.494% 50.494% 0.000% 22.251% 22.251% 22.701% 22.701% 23.682% 23.682%
July 15, 2017................ 49.797% 49.797% 0.000% 21.760% 21.760% 22.190% 22.190% 23.149% 23.149%
August 15, 2017.............. 49.102% 49.102% 0.000% 21.274% 21.274% 21.684% 21.684% 22.621% 22.621%
September 15, 2017........... 48.422% 48.422% 0.000% 20.803% 20.803% 21.195% 21.195% 22.111% 22.111%
October 15, 2017............. 47.734% 47.734% 0.000% 20.329% 20.329% 20.704% 20.704% 21.598% 21.598%
November 15, 2017............ 47.067% 47.067% 0.000% 19.875% 19.875% 20.232% 20.232% 21.106% 21.106%
December 15, 2017............ 46.391% 46.391% 0.000% 19.419% 19.419% 19.759% 19.759% 20.612% 20.612%
January 15, 2018............. 45.717% 45.717% 0.000% 18.967% 18.967% 19.290% 19.290% 20.123% 20.123%
February 15, 2018............ 45.038% 45.038% 0.000% 18.517% 18.517% 18.823% 18.823% 19.636% 19.636%
March 15, 2018............... 44.342% 44.342% 0.000% 18.058% 18.058% 18.349% 18.349% 19.141% 19.141%
April 15, 2018............... 43.673% 43.673% 0.000% 17.622% 17.622% 17.897% 17.897% 18.670% 18.670%
May 15, 2018................. 43.000% 43.000% 0.000% 17.188% 17.188% 17.447% 17.447% 18.201% 18.201%
June 15, 2018................ 42.349% 42.349% 0.000% 16.771% 16.771% 17.016% 17.016% 17.751% 17.751%
July 15, 2018................ 41.745% 41.745% 0.000% 16.353% 16.353% 16.576% 16.576% 17.304% 17.304%
August 15, 2018.............. 41.141% 41.141% 0.000% 15.939% 15.939% 16.140% 16.140% 16.862% 16.862%
September 15, 2018........... 40.534% 40.534% 0.000% 15.528% 15.528% 15.708% 15.708% 16.423% 16.423%
October 15, 2018............. 39.923% 39.923% 0.000% 15.118% 15.118% 15.277% 15.277% 15.985% 15.985%
November 15, 2018............ 39.311% 39.311% 0.000% 14.713% 14.713% 14.852% 14.852% 15.553% 15.553%
December 15, 2018............ 38.693% 38.693% 0.000% 14.307% 14.307% 14.428% 14.428% 15.120% 15.120%
January 15, 2019............. 38.074% 38.074% 0.000% 13.907% 13.907% 14.009% 14.009% 14.693% 14.693%
February 15, 2019............ 37.452% 37.452% 0.000% 13.510% 13.510% 13.593% 13.593% 14.269% 14.269%
March 15, 2019............... 36.816% 36.816% 0.000% 13.108% 13.108% 13.173% 13.173% 13.841% 13.841%
</Table>
5
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------ -------- -------- -------- -------- -------- -------- -------- -------- --------
April 15, 2019............... 36.186% 36.186% 0.000% 12.715% 12.715% 12.764% 12.764% 13.423% 13.423%
May 15, 2019................. 35.549% 35.549% 0.000% 12.324% 12.324% 12.356% 12.356% 13.005% 13.005%
June 15, 2019................ 34.912% 34.912% 0.000% 11.937% 11.937% 11.954% 11.954% 12.593% 12.593%
July 15, 2019................ 34.268% 34.268% 0.000% 11.552% 11.552% 11.553% 11.553% 12.183% 12.183%
August 15, 2019.............. 33.639% 33.639% 0.000% 11.181% 11.181% 11.167% 11.167% 11.788% 11.788%
September 15, 2019........... 33.018% 33.018% 0.000% 10.819% 10.819% 10.793% 10.793% 11.403% 11.403%
October 15, 2019............. 32.403% 32.403% 0.000% 10.467% 10.467% 10.428% 10.428% 11.028% 11.028%
November 15, 2019............ 31.789% 31.789% 0.000% 10.120% 10.120% 10.069% 10.069% 10.659% 10.659%
December 15, 2019............ 31.167% 31.167% 0.000% 9.773% 9.773% 9.711% 9.711% 10.291% 10.291%
January 15, 2020............. 30.545% 30.545% 0.000% 9.432% 9.432% 9.359% 9.359% 9.928% 9.928%
February 15, 2020............ 29.919% 29.919% 0.000% 9.094% 9.094% 9.011% 9.011% 9.568% 9.568%
March 15, 2020............... 29.284% 29.284% 0.000% 8.756% 8.756% 8.663% 8.663% 9.210% 9.210%
April 15, 2020............... 28.661% 28.661% 0.000% 8.430% 8.430% 8.328% 8.328% 8.863% 8.863%
May 15, 2020................. 28.054% 28.054% 0.000% 8.117% 8.117% 8.008% 8.008% 8.532% 8.532%
June 15, 2020................ 27.446% 27.446% 0.000% 7.810% 7.810% 7.693% 7.693% 8.205% 8.205%
July 15, 2020................ 26.832% 26.832% 0.000% 7.504% 7.504% 7.380% 7.380% 7.881% 7.881%
August 15, 2020.............. 26.217% 26.217% 0.000% 7.203% 7.203% 7.073% 7.073% 7.562% 7.562%
September 15, 2020........... 25.598% 25.598% 0.000% 6.905% 6.905% 6.769% 6.769% 7.246% 7.246%
October 15, 2020............. 24.973% 24.973% 0.000% 6.610% 6.610% 6.469% 6.469% 6.934% 6.934%
November 15, 2020............ 24.357% 24.357% 0.000% 6.325% 6.325% 6.179% 6.179% 6.632% 6.632%
December 15, 2020............ 23.735% 23.735% 0.000% 6.042% 6.042% 5.892% 5.892% 6.332% 6.332%
January 15, 2021............. 23.125% 23.125% 0.000% 5.771% 5.771% 5.617% 5.617% 6.045% 6.045%
February 15, 2021............ 22.511% 22.511% 0.000% 5.503% 5.503% 5.347% 5.347% 5.761% 5.761%
March 15, 2021............... 21.887% 21.887% 0.000% 5.236% 5.236% 5.077% 5.077% 5.479% 5.479%
April 15, 2021............... 21.266% 21.266% 0.000% 4.976% 4.976% 4.816% 4.816% 5.205% 5.205%
May 15, 2021................. 20.639% 20.639% 0.000% 4.719% 4.719% 4.558% 4.558% 4.933% 4.933%
June 15, 2021................ 20.010% 20.010% 0.000% 4.467% 4.467% 4.305% 4.305% 4.668% 4.668%
July 15, 2021................ 19.375% 19.375% 0.000% 4.219% 4.219% 4.057% 4.057% 4.406% 4.406%
August 15, 2021.............. 18.739% 18.739% 0.000% 3.977% 3.977% 3.815% 3.815% 4.150% 4.150%
September 15, 2021........... 18.098% 18.098% 0.000% 3.739% 3.739% 3.578% 3.578% 3.900% 3.900%
October 15, 2021............. 17.451% 17.451% 0.000% 3.505% 3.505% 3.346% 3.346% 3.654% 3.654%
November 15, 2021............ 16.802% 16.802% 0.000% 3.277% 3.277% 3.120% 3.120% 3.414% 3.414%
December 15, 2021............ 16.148% 16.148% 0.000% 3.053% 3.053% 2.899% 2.899% 3.179% 3.179%
January 15, 2022............. 15.493% 15.493% 0.000% 2.837% 2.837% 2.685% 2.685% 2.951% 2.951%
February 15, 2022............ 14.835% 14.835% 0.000% 2.626% 2.626% 2.478% 2.478% 2.729% 2.729%
March 15, 2022............... 14.167% 14.167% 0.000% 2.419% 2.419% 2.276% 2.276% 2.512% 2.512%
April 15, 2022............... 13.500% 13.500% 0.000% 2.220% 2.220% 2.081% 2.081% 2.303% 2.303%
May 15, 2022................. 12.827% 12.827% 0.000% 2.026% 2.026% 1.892% 1.892% 2.101% 2.101%
June 15, 2022................ 12.151% 12.151% 0.000% 1.839% 1.839% 1.711% 1.711% 1.905% 1.905%
July 15, 2022................ 11.469% 11.469% 0.000% 1.658% 1.658% 1.537% 1.537% 1.716% 1.716%
August 15, 2022.............. 10.783% 10.783% 0.000% 1.485% 1.485% 1.370% 1.370% 1.535% 1.535%
September 15, 2022........... 10.093% 10.093% 0.000% 1.319% 1.319% 1.211% 1.211% 1.361% 1.361%
October 15, 2022............. 9.434% 9.434% 0.000% 1.168% 1.168% 1.067% 1.067% 1.204% 1.204%
November 15, 2022............ 8.771% 8.771% 0.000% 1.024% 1.024% 0.931% 0.931% 1.055% 1.055%
December 15, 2022............ 8.106% 8.106% 0.000% 0.888% 0.888% 0.803% 0.803% 0.913% 0.913%
January 15, 2023............. 7.438% 7.438% 0.000% 0.760% 0.760% 0.682% 0.682% 0.780% 0.780%
February 15, 2023............ 6.766% 6.766% 0.000% 0.640% 0.640% 0.570% 0.570% 0.656% 0.656%
March 15, 2023............... 6.100% 6.100% 0.000% 0.530% 0.530% 0.468% 0.468% 0.542% 0.542%
April 15, 2023............... 5.432% 5.432% 0.000% 0.428% 0.428% 0.375% 0.375% 0.437% 0.437%
May 15, 2023................. 4.767% 4.767% 0.000% 0.337% 0.337% 0.292% 0.292% 0.342% 0.342%
June 15, 2023................ 4.098% 4.098% 0.000% 0.254% 0.254% 0.217% 0.217% 0.258% 0.258%
July 15, 2023................ 3.423% 3.423% 0.000% 0.181% 0.181% 0.152% 0.152% 0.183% 0.183%
August 15, 2023.............. 2.743% 2.743% 0.000% 0.118% 0.118% 0.097% 0.097% 0.118% 0.118%
September 15, 2023........... 2.069% 2.069% 0.000% 0.067% 0.067% 0.054% 0.054% 0.067% 0.067%
</Table>
6
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------ -------- -------- -------- -------- -------- -------- -------- -------- --------
October 15, 2023............. 1.390% 1.390% 0.000% 0.029% 0.029% 0.022% 0.022% 0.028% 0.028%
November 15, 2023............ 0.705% 0.705% 0.000% 0.004% 0.004% 0.002% 0.002% 0.004% 0.004%
December 15, 2023............ 0.012% 0.012% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2024............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2024............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2024............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2024............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2024................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2024................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2024................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2024.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2024........... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2024............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2024............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2024............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2025............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2025............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2025............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2025............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2025................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2025................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2025................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2025.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2025........... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2025............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2025............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2025............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2026............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2026............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2026............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2026............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2026................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2026................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2026................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2026.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2026........... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2026............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2026............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2026............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2027............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2027............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2027............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2027............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2027................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2027................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2027................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2027.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2027........... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2027............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2027............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2027............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2028............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2028............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2028............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
</Table>
7
<Page>
<Table>
<Caption>
PAYMENT DATE CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
OCCURRING IN A-1 A-2 A-3 B-1 B-2 C-1 C-2 D-1 D-2
------------ -------- -------- -------- -------- -------- -------- -------- -------- --------
April 15, 2028............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2028................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2028................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2028................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2028.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2028........... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2028............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2028............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2028............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2029............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2029............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2029............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2029............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2029................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2029................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2029................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2029.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2029........... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2029............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2029............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2029............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2030............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2030............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2030............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2030............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2030................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2030................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2030................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
August 15, 2030.............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
September 15, 2030........... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
October 15, 2030............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
November 15, 2030............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
December 15, 2030............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
January 15, 2031............. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
February 15, 2031............ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
March 15, 2031............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
April 15, 2031............... 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
May 15, 2031................. 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
June 15, 2031................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
July 15, 2031................ 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
</Table>
8
<Page>
APPENDIX 8
ASSUMED PRINCIPAL PAYMENTS ON THE CLASS B-2, CLASS C-2
AND CLASS D-2 NOTES
<Table>
<Caption>
ASSUMED ASSUMED ASSUMED
CLASS B-2 CLASS C-2 CLASS D-2
PAYMENT DATE PRINCIPAL PRINCIPAL PRINCIPAL
OCCURRING IN PAYMENTS PAYMENTS PAYMENTS
------------ --------- --------- ---------
July 15, 2001............................................... 421,037 -- --
August 15, 2001............................................. 246,353 -- --
September 15, 2001.......................................... 337,411 -- --
October 15, 2001............................................ 186,406 -- --
November 15, 2001........................................... 232,385 -- --
December 15, 2001........................................... 321,184 -- --
January 15, 2002............................................ 175,189 -- --
February 15, 2002........................................... 236,231 -- --
March 15, 2002.............................................. 332,088 -- --
April 15, 2002.............................................. 187,352 -- --
May 15, 2002................................................ 263,555 -- --
June 15, 2002............................................... 353,094 -- --
July 15, 2002............................................... 176,585 159,509 55,385
August 15, 2002............................................. 227,549 205,545 71,370
September 15, 2002.......................................... 305,483 275,943 95,814
October 15, 2002............................................ 174,995 158,073 54,886
November 15, 2002........................................... 218,246 197,142 68,452
December 15, 2002........................................... 297,318 268,567 93,253
January 15, 2003............................................ 169,549 153,154 53,178
February 15, 2003........................................... 214,574 193,824 67,300
March 15, 2003.............................................. 285,556 257,943 89,564
April 15, 2003.............................................. 190,258 171,860 59,674
May 15, 2003................................................ 251,116 226,833 78,762
June 15, 2003............................................... 301,550 272,390 94,580
July 15, 2003............................................... 86,538 78,169 27,142
August 15, 2003............................................. 252,552 228,130 79,212
September 15, 2003.......................................... 270,978 244,774 84,991
October 15, 2003............................................ 216,201 195,295 67,811
November 15, 2003........................................... 260,847 235,623 81,814
December 15, 2003........................................... 263,575 238,087 82,669
January 15, 2004............................................ 212,357 191,823 66,605
February 15, 2004........................................... 264,885 239,271 83,080
March 15, 2004.............................................. 268,907 242,904 84,342
April 15, 2004.............................................. 218,011 196,929 68,378
May 15, 2004................................................ 279,563 252,529 87,684
June 15, 2004............................................... 279,818 252,760 87,764
July 15, 2004............................................... 156,184 141,081 48,986
August 15, 2004............................................. 282,208 254,919 88,513
September 15, 2004.......................................... 283,755 256,316 88,998
October 15, 2004............................................ 235,200 212,456 73,770
</Table>
1
<Page>
<Table>
<Caption>
ASSUMED ASSUMED ASSUMED
CLASS B-2 CLASS C-2 CLASS D-2
PAYMENT DATE PRINCIPAL PRINCIPAL PRINCIPAL
OCCURRING IN PAYMENTS PAYMENTS PAYMENTS
------------ --------- --------- ---------
November 15, 2004........................................... 278,882 251,914 87,470
December 15, 2004........................................... 281,655 254,419 88,340
January 15, 2005............................................ 230,590 208,292 72,324
February 15, 2005........................................... 283,218 255,830 88,830
March 15, 2005.............................................. 288,463 260,569 90,475
April 15, 2005.............................................. 226,421 204,526 71,016
May 15, 2005................................................ 296,530 267,856 93,006
June 15, 2005............................................... 296,934 268,220 93,132
July 15, 2005............................................... 248,409 224,388 77,912
August 15, 2005............................................. 299,922 270,920 94,069
September 15, 2005.......................................... 301,566 272,405 94,585
October 15, 2005............................................ 253,838 229,292 79,615
November 15, 2005........................................... 301,512 272,355 94,568
December 15, 2005........................................... 305,140 275,633 95,706
January 15, 2006............................................ 254,262 229,675 79,748
February 15, 2006........................................... 307,045 277,354 96,303
March 15, 2006.............................................. 312,243 282,049 97,934
April 15, 2006.............................................. 259,076 234,023 81,258
May 15, 2006................................................ 313,021 282,752 98,178
June 15, 2006............................................... 313,574 283,252 98,351
July 15, 2006............................................... 265,080 239,447 83,141
August 15, 2006............................................. 316,746 286,117 99,346
September 15, 2006.......................................... 318,482 287,685 99,890
October 15, 2006............................................ 269,998 243,889 84,684
November 15, 2006........................................... 321,707 290,598 100,902
December 15, 2006........................................... 324,594 293,206 101,808
January 15, 2007............................................ 273,885 247,401 85,903
February 15, 2007........................................... 326,750 295,153 102,484
March 15, 2007.............................................. 331,865 299,773 104,088
April 15, 2007.............................................. 278,996 252,017 87,506
May 15, 2007................................................ 332,986 300,786 104,440
June 15, 2007............................................... 333,713 301,443 104,668
July 15, 2007............................................... 285,264 257,679 89,472
August 15, 2007............................................. 337,106 304,508 105,732
September 15, 2007.......................................... 338,953 306,176 106,311
October 15, 2007............................................ 290,516 262,423 91,119
November 15, 2007........................................... 342,403 309,293 107,393
December 15, 2007........................................... 346,755 313,224 108,758
January 15, 2008............................................ 296,235 267,589 92,913
February 15, 2008........................................... 349,468 315,675 109,609
March 15, 2008.............................................. 354,331 320,068 111,135
April 15, 2008.............................................. 303,140 273,826 95,079
May 15, 2008................................................ 357,786 323,188 112,218
June 15, 2008............................................... 358,562 323,889 112,461
July 15, 2008............................................... 310,179 280,185 97,286
</Table>
2
<Page>
<Table>
<Caption>
ASSUMED ASSUMED ASSUMED
CLASS B-2 CLASS C-2 CLASS D-2
PAYMENT DATE PRINCIPAL PRINCIPAL PRINCIPAL
OCCURRING IN PAYMENTS PAYMENTS PAYMENTS
------------ --------- --------- ---------
August 15, 2008............................................. 362,227 327,200 113,611
September 15, 2008.......................................... 364,212 328,993 114,234
October 15, 2008............................................ 315,842 285,300 99,063
November 15, 2008........................................... 367,939 332,359 115,403
December 15, 2008........................................... 370,941 335,071 116,344
January 15, 2009............................................ 320,625 289,620 100,563
February 15, 2009........................................... 373,746 337,604 117,224
March 15, 2009.............................................. 378,695 342,075 118,776
April 15, 2009.............................................. 326,506 294,933 102,407
May 15, 2009................................................ 380,613 343,808 119,378
June 15, 2009............................................... 381,745 344,830 119,733
July 15, 2009............................................... 333,414 301,173 104,574
August 15, 2009............................................. 385,370 348,105 120,870
September 15, 2009.......................................... 387,196 349,754 121,443
October 15, 2009............................................ 339,413 306,592 106,456
November 15, 2009........................................... 390,600 352,829 122,510
December 15, 2009........................................... 394,737 356,566 123,807
January 15, 2010............................................ 342,815 309,665 107,522
February 15, 2010........................................... 395,765 357,495 124,130
March 15, 2010.............................................. 406,891 367,545 127,620
April 15, 2010.............................................. 348,233 314,559 109,222
May 15, 2010................................................ 404,827 365,680 126,972
June 15, 2010............................................... 403,149 364,164 126,446
July 15, 2010............................................... 357,849 323,245 112,238
August 15, 2010............................................. 406,746 367,413 127,574
September 15, 2010.......................................... 408,687 369,167 128,183
October 15, 2010............................................ 364,206 328,987 114,232
November 15, 2010........................................... 412,339 372,466 129,328
December 15, 2010........................................... 419,772 379,180 131,660
January 15, 2011............................................ 364,959 329,668 114,468
February 15, 2011........................................... 418,028 377,605 131,113
March 15, 2011.............................................. 438,783 396,353 137,623
April 15, 2011.............................................. 370,787 334,932 116,296
May 15, 2011................................................ 430,664 389,019 135,076
June 15, 2011............................................... 425,963 384,772 133,602
July 15, 2011............................................... 383,948 346,820 120,424
August 15, 2011............................................. 430,328 388,716 134,971
September 15, 2011.......................................... 432,742 390,896 135,728
October 15, 2011............................................ 390,750 352,965 122,557
November 15, 2011........................................... 403,119 364,137 126,437
December 15, 2011........................................... 429,323 387,807 134,655
January 15, 2012............................................ 424,910 383,821 133,271
February 15, 2012........................................... 427,293 385,974 134,019
</Table>
3
<Page>
<Table>
<Caption>
ASSUMED ASSUMED ASSUMED
CLASS B-2 CLASS C-2 CLASS D-2
PAYMENT DATE PRINCIPAL PRINCIPAL PRINCIPAL
OCCURRING IN PAYMENTS PAYMENTS PAYMENTS
------------ --------- --------- ---------
March 15, 2012.............................................. 442,936 400,105 138,925
April 15, 2012.............................................. 432,174 390,383 135,550
May 15, 2012................................................ 441,087 398,434 138,345
June 15, 2012............................................... 437,073 394,808 137,086
July 15, 2012............................................... 445,877 402,761 139,847
August 15, 2012............................................. 442,026 399,282 138,640
September 15, 2012.......................................... 444,505 401,522 139,417
October 15, 2012............................................ 453,145 409,326 142,127
November 15, 2012........................................... 449,540 406,070 140,997
December 15, 2012........................................... 458,387 414,061 143,771
January 15, 2013............................................ 454,952 410,958 142,694
February 15, 2013........................................... 457,504 413,264 143,494
March 15, 2013.............................................. 477,454 431,284 149,751
April 15, 2013.............................................. 461,979 417,305 144,898
May 15, 2013................................................ 470,219 424,749 147,482
June 15, 2013............................................... 465,470 420,459 145,993
July 15, 2013............................................... 473,586 427,790 148,538
August 15, 2013............................................. 470,738 425,217 147,645
September 15, 2013.......................................... 473,378 427,603 148,473
October 15, 2013............................................ 481,319 434,775 150,964
November 15, 2013........................................... 476,375 430,309 149,413
December 15, 2013........................................... 484,184 437,364 151,862
January 15, 2014............................................ 479,395 433,037 150,360
February 15, 2014........................................... 482,084 435,466 151,204
March 15, 2014.............................................. 499,529 451,225 156,675
April 15, 2014.............................................. 487,590 440,440 152,931
May 15, 2014................................................ 495,086 447,211 155,282
June 15, 2014............................................... 493,102 445,419 154,659
July 15, 2014............................................... 500,476 452,080 156,972
August 15, 2014............................................. 496,806 448,765 155,821
September 15, 2014.......................................... 499,592 451,282 156,695
October 15, 2014............................................ 506,771 457,767 158,947
November 15, 2014........................................... 505,237 456,381 158,466
December 15, 2014........................................... 512,292 462,753 160,678
January 15, 2015............................................ 508,496 459,324 159,488
February 15, 2015........................................... 511,348 461,901 160,382
March 15, 2015.............................................. 526,166 475,286 165,030
April 15, 2015.............................................. 517,168 467,158 162,208
May 15, 2015................................................ 522,492 471,967 163,878
June 15, 2015............................................... 521,601 471,163 163,598
July 15, 2015............................................... 528,188 477,112 165,664
August 15, 2015............................................. 527,490 476,482 165,445
September 15, 2015.......................................... 530,449 479,155 166,373
October 15, 2015............................................ 536,839 484,927 168,377
</Table>
4
<Page>
<Table>
<Caption>
ASSUMED ASSUMED ASSUMED
CLASS B-2 CLASS C-2 CLASS D-2
PAYMENT DATE PRINCIPAL PRINCIPAL PRINCIPAL
OCCURRING IN PAYMENTS PAYMENTS PAYMENTS
------------ --------- --------- ---------
November 15, 2015........................................... 536,436 484,562 168,251
December 15, 2015........................................... 542,694 490,215 170,214
January 15, 2016............................................ 542,209 489,778 170,062
February 15, 2016........................................... 544,775 492,095 170,866
March 15, 2016.............................................. 553,825 500,270 173,705
April 15, 2016.............................................. 550,937 497,662 172,799
May 15, 2016................................................ 555,315 501,616 174,172
June 15, 2016............................................... 555,604 501,877 174,263
July 15, 2016............................................... 559,377 505,286 175,446
August 15, 2016............................................. 559,861 505,722 175,598
September 15, 2016.......................................... 563,001 508,559 176,583
October 15, 2016............................................ 568,554 513,575 178,325
November 15, 2016........................................... 569,349 514,293 178,574
December 15, 2016........................................... 567,070 512,235 177,859
January 15, 2017............................................ 568,033 513,104 178,161
February 15, 2017........................................... 571,219 515,983 179,161
March 15, 2017.............................................. 580,287 524,173 182,005
April 15, 2017.............................................. 577,679 521,817 181,186
May 15, 2017................................................ 582,694 526,348 182,760
June 15, 2017............................................... 584,187 527,697 183,228
July 15, 2017............................................... 589,059 532,097 184,756
August 15, 2017............................................. 590,769 533,641 185,292
September 15, 2017.......................................... 579,080 523,083 181,626
October 15, 2017............................................ 583,651 527,212 183,060
November 15, 2017........................................... 570,670 515,487 178,988
December 15, 2017........................................... 575,016 519,412 180,351
January 15, 2018............................................ 577,097 521,292 181,004
February 15, 2018........................................... 580,334 524,216 182,019
March 15, 2018.............................................. 586,219 529,532 183,865
April 15, 2018.............................................. 574,355 518,815 180,148
May 15, 2018................................................ 4,507,402 4,071,537 1,413,728
June 15, 2018............................................... -- -- --
July 15, 2018............................................... -- -- --
August 15, 2018............................................. -- -- --
September 15, 2018.......................................... -- -- --
October 15, 2018............................................ -- -- --
November 15, 2018........................................... -- -- --
December 15, 2018........................................... -- -- --
January 15, 2019............................................ -- -- --
February 15, 2019........................................... -- -- --
March 15, 2019.............................................. -- -- --
April 15, 2019.............................................. -- -- --
May 15, 2019................................................ -- -- --
June 15, 2019............................................... -- -- --
</Table>
5
<Page>
<Table>
<Caption>
ASSUMED ASSUMED ASSUMED
CLASS B-2 CLASS C-2 CLASS D-2
PAYMENT DATE PRINCIPAL PRINCIPAL PRINCIPAL
OCCURRING IN PAYMENTS PAYMENTS PAYMENTS
------------ --------- --------- ---------
July 15, 2019............................................... -- -- --
August 15, 2019............................................. -- -- --
September 15, 2019.......................................... -- -- --
October 15, 2019............................................ -- -- --
November 15, 2019........................................... -- -- --
December 15, 2019........................................... -- -- --
January 15, 2020............................................ -- -- --
February 15, 2020........................................... -- -- --
March 15, 2020.............................................. -- -- --
April 15, 2020.............................................. -- -- --
May 15, 2020................................................ -- -- --
June 15, 2020............................................... -- -- --
July 15, 2020............................................... -- -- --
August 15, 2020............................................. -- -- --
September 15, 2020.......................................... -- -- --
October 15, 2020............................................ -- -- --
November 15, 2020........................................... -- -- --
December 15, 2020........................................... -- -- --
January 15, 2021............................................ -- -- --
February 15, 2021........................................... -- -- --
March 15, 2021.............................................. -- -- --
April 15, 2021.............................................. -- -- --
May 15, 2021................................................ -- -- --
June 15, 2021............................................... -- -- --
July 15, 2021............................................... -- -- --
August 15, 2021............................................. -- -- --
September 15, 2021.......................................... -- -- --
October 15, 2021............................................ -- -- --
November 15, 2021........................................... -- -- --
December 15, 2021........................................... -- -- --
January 15, 2022............................................ -- -- --
February 15, 2022........................................... -- -- --
March 15, 2022.............................................. -- -- --
April 15, 2022.............................................. -- -- --
May 15, 2022................................................ -- -- --
June 15, 2022............................................... -- -- --
July 15, 2022............................................... -- -- --
August 15, 2022............................................. -- -- --
September 15, 2022.......................................... -- -- --
October 15, 2022............................................ -- -- --
November 15, 2022........................................... -- -- --
December 15, 2022........................................... -- -- --
January 15, 2023............................................ -- -- --
February 15, 2023........................................... -- -- --
</Table>
6
<Page>
<Table>
<Caption>
ASSUMED ASSUMED ASSUMED
CLASS B-2 CLASS C-2 CLASS D-2
PAYMENT DATE PRINCIPAL PRINCIPAL PRINCIPAL
OCCURRING IN PAYMENTS PAYMENTS PAYMENTS
------------ --------- --------- ---------
March 15, 2023.............................................. -- -- --
April 15, 2023.............................................. -- -- --
May 15, 2023................................................ -- -- --
June 15, 2023............................................... -- -- --
July 15, 2023............................................... -- -- --
August 15, 2023............................................. -- -- --
September 15, 2023.......................................... -- -- --
October 15, 2023............................................ -- -- --
November 15, 2023........................................... -- -- --
December 15, 2023........................................... -- -- --
January 15, 2024............................................ -- -- --
February 15, 2024........................................... -- -- --
March 15, 2024.............................................. -- -- --
April 15, 2024.............................................. -- -- --
May 15, 2024................................................ -- -- --
June 15, 2024............................................... -- -- --
July 15, 2024............................................... -- -- --
August 15, 2024............................................. -- -- --
September 15, 2024.......................................... -- -- --
October 15, 2024............................................ -- -- --
November 15, 2024........................................... -- -- --
December 15, 2024........................................... -- -- --
January 15, 2025............................................ -- -- --
February 15, 2025........................................... -- -- --
March 15, 2025.............................................. -- -- --
April 15, 2025.............................................. -- -- --
May 15, 2025................................................ -- -- --
June 15, 2025............................................... -- -- --
July 15, 2025............................................... -- -- --
August 15, 2025............................................. -- -- --
September 15, 2025.......................................... -- -- --
October 15, 2025............................................ -- -- --
November 15, 2025........................................... -- -- --
December 15, 2025........................................... -- -- --
January 15, 2026............................................ -- -- --
February 15, 2026........................................... -- -- --
March 15, 2026.............................................. -- -- --
April 15, 2026.............................................. -- -- --
May 15, 2026................................................ -- -- --
June 15, 2026............................................... -- -- --
July 15, 2026............................................... -- -- --
August 15, 2026............................................. -- -- --
September 15, 2026.......................................... -- -- --
October 15, 2026............................................ -- -- --
</Table>
7
<Page>
<Table>
<Caption>
ASSUMED ASSUMED ASSUMED
CLASS B-2 CLASS C-2 CLASS D-2
PAYMENT DATE PRINCIPAL PRINCIPAL PRINCIPAL
OCCURRING IN PAYMENTS PAYMENTS PAYMENTS
------------ --------- --------- ---------
November 15, 2026........................................... -- -- --
December 15, 2026........................................... -- -- --
January 15, 2027............................................ -- -- --
February 15, 2027........................................... -- -- --
March 15, 2027.............................................. -- -- --
April 15, 2027.............................................. -- -- --
May 15, 2027................................................ -- -- --
June 15, 2027............................................... -- -- --
July 15, 2027............................................... -- -- --
August 15, 2027............................................. -- -- --
September 15, 2027.......................................... -- -- --
October 15, 2027............................................ -- -- --
November 15, 2027........................................... -- -- --
December 15, 2027........................................... -- -- --
January 15, 2028............................................ -- -- --
February 15, 2028........................................... -- -- --
March 15, 2028.............................................. -- -- --
April 15, 2028.............................................. -- -- --
May 15, 2028................................................ -- -- --
June 15, 2028............................................... -- -- --
July 15, 2028............................................... -- -- --
August 15, 2028............................................. -- -- --
September 15, 2028.......................................... -- -- --
October 15, 2028............................................ -- -- --
November 15, 2028........................................... -- -- --
December 15, 2028........................................... -- -- --
January 15, 2029............................................ -- -- --
February 15, 2029........................................... -- -- --
March 15, 2029.............................................. -- -- --
April 15, 2029.............................................. -- -- --
May 15, 2029................................................ -- -- --
June 15, 2029............................................... -- -- --
July 15, 2029............................................... -- -- --
August 15, 2029............................................. -- -- --
September 15, 2029.......................................... -- -- --
October 15, 2029............................................ -- -- --
November 15, 2029........................................... -- -- --
December 15, 2029........................................... -- -- --
January 15, 2030............................................ -- -- --
February 15, 2030........................................... -- -- --
March 15, 2030.............................................. -- -- --
April 15, 2030.............................................. -- -- --
May 15, 2030................................................ -- -- --
June 15, 2030............................................... -- -- --
</Table>
8
<Page>
<Table>
<Caption>
ASSUMED ASSUMED ASSUMED
CLASS B-2 CLASS C-2 CLASS D-2
PAYMENT DATE PRINCIPAL PRINCIPAL PRINCIPAL
OCCURRING IN PAYMENTS PAYMENTS PAYMENTS
------------ --------- --------- ---------
July 15, 2030............................................... -- -- --
August 15, 2030............................................. -- -- --
September 15, 2030.......................................... -- -- --
October 15, 2030............................................ -- -- --
November 15, 2030........................................... -- -- --
December 15, 2030........................................... -- -- --
January 15, 2031............................................ -- -- --
February 15, 2031........................................... -- -- --
March 15, 2031.............................................. -- -- --
April 15, 2031.............................................. -- -- --
May 15, 2031................................................ -- -- --
June 15, 2031............................................... -- -- --
July 15, 2031............................................... -- -- --
</Table>
9
<Page>
APPENDIX 9
MONTHLY LEASE RATE FACTOR CURVE
MONTHLY LEASE RATE FACTOR SCHEDULE
<Table>
<Caption>
AGE WIDEBODY/
(MONTHS) NARROWBODY FREIGHTER
-------- ---------- ---------
1....................................................... 0.8108% 0.7520%
2....................................................... 0.8118% 0.7535%
3....................................................... 0.8127% 0.7550%
4....................................................... 0.8137% 0.7565%
5....................................................... 0.8147% 0.7580%
6....................................................... 0.8157% 0.7595%
7....................................................... 0.8167% 0.7610%
8....................................................... 0.8177% 0.7625%
9....................................................... 0.8188% 0.7641%
10....................................................... 0.8199% 0.7656%
11....................................................... 0.8209% 0.7671%
12....................................................... 0.8220% 0.7687%
13....................................................... 0.8231% 0.7702%
14....................................................... 0.8243% 0.7718%
15....................................................... 0.8254% 0.7734%
16....................................................... 0.8265% 0.7750%
17....................................................... 0.8277% 0.7765%
18....................................................... 0.8289% 0.7781%
19....................................................... 0.8301% 0.7797%
20....................................................... 0.8313% 0.7813%
21....................................................... 0.8325% 0.7829%
22....................................................... 0.8338% 0.7846%
23....................................................... 0.8351% 0.7862%
24....................................................... 0.8363% 0.7878%
25....................................................... 0.8376% 0.7895%
26....................................................... 0.8389% 0.7911%
27....................................................... 0.8403% 0.7928%
28....................................................... 0.8416% 0.7945%
29....................................................... 0.8430% 0.7961%
30....................................................... 0.8443% 0.7978%
31....................................................... 0.8457% 0.7995%
32....................................................... 0.8471% 0.8012%
33....................................................... 0.8486% 0.8029%
34....................................................... 0.8500% 0.8046%
35....................................................... 0.8515% 0.8063%
36....................................................... 0.8529% 0.8081%
37....................................................... 0.8544% 0.8098%
38....................................................... 0.8559% 0.8116%
39....................................................... 0.8574% 0.8133%
40....................................................... 0.8590% 0.8151%
</Table>
1
<Page>
<Table>
<Caption>
AGE WIDEBODY/
(MONTHS) NARROWBODY FREIGHTER
-------- ---------- ---------
41....................................................... 0.8605% 0.8169%
42....................................................... 0.8621% 0.8186%
43....................................................... 0.8637% 0.8204%
44....................................................... 0.8653% 0.8222%
45....................................................... 0.8669% 0.8240%
46....................................................... 0.8686% 0.8259%
47....................................................... 0.8702% 0.8277%
48....................................................... 0.8719% 0.8295%
49....................................................... 0.8736% 0.8314%
50....................................................... 0.8753% 0.8332%
51....................................................... 0.8770% 0.8351%
52....................................................... 0.8788% 0.8370%
53....................................................... 0.8805% 0.8388%
54....................................................... 0.8823% 0.8407%
55....................................................... 0.8841% 0.8426%
56....................................................... 0.8859% 0.8445%
57....................................................... 0.8878% 0.8464%
58....................................................... 0.8896% 0.8484%
59....................................................... 0.8915% 0.8503%
60....................................................... 0.8934% 0.8523%
61....................................................... 0.8953% 0.8542%
62....................................................... 0.8972% 0.8562%
63....................................................... 0.8991% 0.8581%
64....................................................... 0.9011% 0.8601%
65....................................................... 0.9031% 0.8621%
66....................................................... 0.9051% 0.8641%
67....................................................... 0.9071% 0.8661%
68....................................................... 0.9091% 0.8682%
69....................................................... 0.9111% 0.8702%
70....................................................... 0.9132% 0.8722%
71....................................................... 0.9153% 0.8743%
72....................................................... 0.9174% 0.8764%
73....................................................... 0.9195% 0.8784%
74....................................................... 0.9217% 0.8805%
75....................................................... 0.9238% 0.8826%
76....................................................... 0.9260% 0.8847%
77....................................................... 0.9282% 0.8868%
78....................................................... 0.9304% 0.8890%
79....................................................... 0.9326% 0.8911%
80....................................................... 0.9349% 0.8932%
81....................................................... 0.9372% 0.8954%
82....................................................... 0.9394% 0.8976%
83....................................................... 0.9418% 0.8998%
84....................................................... 0.9441% 0.9019%
85....................................................... 0.9464% 0.9041%
</Table>
2
<Page>
<Table>
<Caption>
AGE WIDEBODY/
(MONTHS) NARROWBODY FREIGHTER
-------- ---------- ---------
86....................................................... 0.9488% 0.9064%
87....................................................... 0.9512% 0.9086%
88....................................................... 0.9536% 0.9108%
89....................................................... 0.9560% 0.9131%
90....................................................... 0.9585% 0.9153%
91....................................................... 0.9609% 0.9176%
92....................................................... 0.9634% 0.9199%
93....................................................... 0.9659% 0.9222%
94....................................................... 0.9684% 0.9245%
95....................................................... 0.9710% 0.9268%
96....................................................... 0.9735% 0.9291%
97....................................................... 0.9761% 0.9314%
98....................................................... 0.9787% 0.9338%
99....................................................... 0.9813% 0.9361%
100....................................................... 0.9840% 0.9385%
101....................................................... 0.9866% 0.9409%
102....................................................... 0.9893% 0.9433%
103....................................................... 0.9920% 0.9457%
104....................................................... 0.9948% 0.9481%
105....................................................... 0.9975% 0.9505%
106....................................................... 1.0003% 0.9530%
107....................................................... 1.0030% 0.9554%
108....................................................... 1.0058% 0.9579%
109....................................................... 1.0087% 0.9604%
110....................................................... 1.0115% 0.9629%
111....................................................... 1.0144% 0.9654%
112....................................................... 1.0173% 0.9679%
113....................................................... 1.0202% 0.9704%
114....................................................... 1.0231% 0.9730%
115....................................................... 1.0260% 0.9755%
116....................................................... 1.0290% 0.9781%
117....................................................... 1.0320% 0.9807%
118....................................................... 1.0350% 0.9833%
119....................................................... 1.0380% 0.9859%
120....................................................... 1.0411% 0.9885%
121....................................................... 1.0442% 0.9911%
122....................................................... 1.0473% 0.9937%
123....................................................... 1.0504% 0.9964%
124....................................................... 1.0535% 0.9991%
125....................................................... 1.0567% 1.0017%
126....................................................... 1.0598% 1.0044%
127....................................................... 1.0630% 1.0071%
128....................................................... 1.0663% 1.0099%
129....................................................... 1.0695% 1.0126%
</Table>
3
<Page>
<Table>
<Caption>
AGE WIDEBODY/
(MONTHS) NARROWBODY FREIGHTER
-------- ---------- ---------
130....................................................... 1.0728% 1.0154%
131....................................................... 1.0761% 1.0181%
132....................................................... 1.0794% 1.0209%
133....................................................... 1.0827% 1.0237%
134....................................................... 1.0861% 1.0265%
135....................................................... 1.0894% 1.0293%
136....................................................... 1.0928% 1.0321%
137....................................................... 1.0962% 1.0350%
138....................................................... 1.0997% 1.0378%
139....................................................... 1.1031% 1.0407%
140....................................................... 1.1066% 1.0436%
141....................................................... 1.1101% 1.0465%
142....................................................... 1.1137% 1.0494%
143....................................................... 1.1172% 1.0523%
144....................................................... 1.1208% 1.0552%
145....................................................... 1.1244% 1.0582%
146....................................................... 1.1280% 1.0612%
147....................................................... 1.1316% 1.0641%
148....................................................... 1.1353% 1.0671%
149....................................................... 1.1390% 1.0701%
150....................................................... 1.1427% 1.0732%
151....................................................... 1.1464% 1.0762%
152....................................................... 1.1502% 1.0793%
153....................................................... 1.1540% 1.0823%
1254...................................................... 1.1578% 1.0854%
155....................................................... 1.1616% 1.0885%
156....................................................... 1.1654% 1.0916%
157....................................................... 1.1693% 1.0947%
158....................................................... 1.1732% 1.0979%
159....................................................... 1.1771% 1.1010%
160....................................................... 1.1810% 1.1042%
161....................................................... 1.1850% 1.1074%
162....................................................... 1.1890% 1.1106%
163....................................................... 1.1930% 1.1138%
164....................................................... 1.1970% 1.1171%
165....................................................... 1.2011% 1.1203%
166....................................................... 1.2052% 1.1236%
167....................................................... 1.2093% 1.1268%
168....................................................... 1.2134% 1.1301%
169....................................................... 1.2175% 1.1334%
170....................................................... 1.2217% 1.1368%
171....................................................... 1.2259% 1.1401%
172....................................................... 1.2301% 1.1435%
</Table>
4
<Page>
<Table>
<Caption>
AGE WIDEBODY/
(MONTHS) NARROWBODY FREIGHTER
-------- ---------- ---------
173....................................................... 1.2344% 1.1468%
174....................................................... 1.2386% 1.1502%
175....................................................... 1.2429% 1.1536%
176....................................................... 1.2472% 1.1570%
177....................................................... 1.2516% 1.1605%
178....................................................... 1.2559% 1.1639%
179....................................................... 1.2603% 1.1674%
180....................................................... 1.2647% 1.1709%
181....................................................... 1.2692% 1.1744%
182....................................................... 1.2736% 1.1779%
183....................................................... 1.2781% 1.1814%
184....................................................... 1.2826% 1.1850%
185....................................................... 1.2872% 1.1885%
186....................................................... 1.2917% 1.1921%
187....................................................... 1.2963% 1.1957%
188....................................................... 1.3009% 1.1993%
189....................................................... 1.3056% 1.2029%
190....................................................... 1.3102% 1.2066%
191....................................................... 1.3149% 1.2102%
192....................................................... 1.3196% 1.2139%
193....................................................... 1.3244% 1.2176%
194....................................................... 1.3291% 1.2213%
195....................................................... 1.3339% 1.2250%
196....................................................... 1.3387% 1.2288%
197....................................................... 1.3435% 1.2326%
198....................................................... 1.3484% 1.2363%
199....................................................... 1.3533% 1.2401%
200....................................................... 1.3582% 1.2439%
201....................................................... 1.3631% 1.2478%
202....................................................... 1.3681% 1.2516%
203....................................................... 1.3731% 1.2555%
204....................................................... 1.3781% 1.2594%
205....................................................... 1.3831% 1.2633%
206....................................................... 1.3882% 1.2672%
207....................................................... 1.3933% 1.2711%
208....................................................... 1.3984% 1.2751%
209....................................................... 1.4035% 1.2790%
210....................................................... 1.4087% 1.2830%
211....................................................... 1.4139% 1.2870%
212....................................................... 1.4191% 1.2911%
213....................................................... 1.4244% 1.2951%
214....................................................... 1.4296% 1.2991%
215....................................................... 1.4349% 1.3032%
</Table>
5
<Page>
<Table>
<Caption>
AGE WIDEBODY/
(MONTHS) NARROWBODY FREIGHTER
-------- ---------- ---------
216....................................................... 1.4402% 1.3073%
217....................................................... 1.4456% 1.3114%
218....................................................... 1.4510% 1.3156%
219....................................................... 1.4564% 1.3197%
220....................................................... 1.4618% 1.3239%
221....................................................... 1.4673% 1.3281%
222....................................................... 1.4727% 1.3323%
223....................................................... 1.4782% 1.3365%
224....................................................... 1.4838% 1.3407%
225....................................................... 1.4893% 1.3450%
226....................................................... 1.4949% 1.3493%
227....................................................... 1.5005% 1.3536%
228....................................................... 1.5062% 1.3579%
229....................................................... 1.5119% 1.3622%
230....................................................... 1.5176% 1.3665%
231....................................................... 1.5233% 1.3709%
232....................................................... 1.5290% 1.3753%
233....................................................... 1.5348% 1.3797%
234....................................................... 1.5406% 1.3841%
235....................................................... 1.5464% 1.3886%
236....................................................... 1.5523% 1.3930%
237....................................................... 1.5582% 1.3975%
238....................................................... 1.5641% 1.4020%
239....................................................... 1.5700% 1.4066%
240....................................................... 1.5760% 1.4111%
241....................................................... 1.5820% 1.4157%
242....................................................... 1.5880% 1.4202%
243....................................................... 1.5941% 1.4248%
244....................................................... 1.6002% 1.4295%
245....................................................... 1.6063% 1.4341%
246....................................................... 1.6124% 1.4388%
247....................................................... 1.6186% 1.4434%
248....................................................... 1.6248% 1.4481%
249....................................................... 1.6310% 1.4528%
250....................................................... 1.6372% 1.4576%
251....................................................... 1.6435% 1.4623%
252....................................................... 1.6498% 1.4671%
253....................................................... 1.6561% 1.4719%
254....................................................... 1.6625% 1.4767%
255....................................................... 1.6689% 1.4816%
256....................................................... 1.6753% 1.4864%
257....................................................... 1.6817% 1.4913%
258....................................................... 1.6882% 1.4962%
</Table>
6
<Page>
<Table>
<Caption>
AGE WIDEBODY/
(MONTHS) NARROWBODY FREIGHTER
-------- ---------- ---------
259....................................................... 1.6947% 1.5011%
260....................................................... 1.7012% 1.5060%
261....................................................... 1.7078% 1.5110%
262....................................................... 1.7144% 1.5160%
263....................................................... 1.7210% 1.5210%
264....................................................... 1.7277% 1.5260%
265....................................................... 1.7343% 1.5310%
266....................................................... 1.7410% 1.5361%
267....................................................... 1.7478% 1.5412%
268....................................................... 1.7545% 1.5463%
269....................................................... 1.7613% 1.5514%
270....................................................... 1.7681% 1.5565%
271....................................................... 1.7750% 1.5617%
272....................................................... 1.7819% 1.5669%
273....................................................... 1.7888% 1.5721%
274....................................................... 1.7957% 1.5773%
275....................................................... 1.8027% 1.5826%
276....................................................... 1.8097% 1.5879%
277....................................................... 1.8167% 1.5931%
278....................................................... 1.8237% 1.5985%
279....................................................... 1.8308% 1.6038%
280....................................................... 1.8379% 1.6091%
281....................................................... 1.8451% 1.6145%
282....................................................... 1.8523% 1.6199%
283....................................................... 1.8595% 1.6253%
284....................................................... 1.8667% 1.6308%
285....................................................... 1.8740% 1.6362%
286....................................................... 1.8813% 1.6417%
287....................................................... 1.8886% 1.6472%
288....................................................... 1.8959% 1.6528%
289....................................................... 1.9033% 1.6583%
290....................................................... 1.9107% 1.6639%
291....................................................... 1.9182% 1.6695%
292....................................................... 1.9256% 1.6751%
293....................................................... 1.9332% 1.6807%
294....................................................... 1.9407% 1.6864%
295....................................................... 1.9483% 1.6921%
296....................................................... 1.9558% 1.6978%
297....................................................... 1.9635% 1.7035%
298....................................................... 1.9711% 1.7093%
299....................................................... 1.9788% 1.7150%
300....................................................... 1.9865% 1.7208%
301....................................................... 1.9943% 1.7266%
302....................................................... 2.0021% 1.7325%
303....................................................... 2.0099% 1.7384%
</Table>
7
<Page>
<Table>
<Caption>
AGE WIDEBODY/
(MONTHS) NARROWBODY FREIGHTER
-------- ---------- ---------
304....................................................... 2.0177% 1.7442%
305....................................................... 2.0256% 1.7501%
306....................................................... 2.0335% 1.7561%
307....................................................... 2.0414% 1.7620%
308....................................................... 2.0494% 1.7680%
309....................................................... 2.0574% 1.7740%
310....................................................... 2.0654% 1.7800%
311....................................................... 2.0735% 1.7861%
312....................................................... 2.0816% 1.7921%
313....................................................... 2.0897% 1.7982%
314....................................................... 2.0979% 1.8044%
315....................................................... 2.1060% 1.8105%
316....................................................... 2.1143% 1.8167%
317....................................................... 2.1225% 1.8228%
318....................................................... 2.1308% 1.8290%
319....................................................... 2.1391% 1.8353%
320....................................................... 2.1475% 1.8415%
321....................................................... 2.1558% 1.8478%
322....................................................... 2.1642% 1.8541%
323....................................................... 2.1727% 1.8604%
324....................................................... 2.1812% 1.8668%
325....................................................... 2.1897% 1.8732%
326....................................................... 2.1982% 1.8796%
327....................................................... 2.2068% 1.8860%
328....................................................... 2.2154% 1.8924%
329....................................................... 2.2240% 1.8989%
330....................................................... 2.2327% 1.9054%
331....................................................... 2.2414% 1.9119%
332....................................................... 2.2501% 1.9185%
333....................................................... 2.2589% 1.9250%
334....................................................... 2.2677% 1.9316%
335....................................................... 2.2765% 1.9382%
336....................................................... 2.2854% 1.9449%
337....................................................... 2.2943% 1.9515%
338....................................................... 2.3032% 1.9582%
339....................................................... 2.3121% 1.9650%
340....................................................... 2.3211% 1.9717%
341....................................................... 2.3302% 1.9785%
</Table>
8
<Page>
<Table>
<Caption>
AGE WIDEBODY/
(MONTHS) NARROWBODY FREIGHTER
-------- ---------- ---------
342....................................................... 2.3392% 1.9852%
343....................................................... 2.3483% 1.9921%
344....................................................... 2.3574% 1.9989%
345....................................................... 2.3666% 2.0058%
346....................................................... 2.3758% 2.0126%
347....................................................... 2.3850% 2.0196%
348....................................................... 2.3943% 2.0265%
349....................................................... 2.4036% 2.0335%
350....................................................... 2.4129% 2.0404%
351....................................................... 2.4223% 2.0475%
352....................................................... 2.4316% 2.0545%
353....................................................... 2.4411% 2.0616%
354....................................................... 2.4505% 2.0687%
355....................................................... 2.4600% 2.0758%
356....................................................... 2.4696% 2.0829%
357....................................................... 2.4791% 2.0901%
358....................................................... 2.4887% 2.0973%
359....................................................... 2.4983% 2.1045%
360....................................................... 2.5080% 2.1117%
</Table>
9
<Page>
APPENDIX 10
LEASE INVESTMENT FLIGHT TRUST ("LIFT")
C/O WILMINGTON TRUST COMPANY
1100 NORTH MARKET STREET
RODNEY SQUARE NORTH
WILMINGTON, DELAWARE 19890
ADJUSTED BASE VALUE OPINION
39 AIRCRAFT FLEET
AISI FILE NO.: A1S007BVO
DATE: 27 APRIL 2001
VALUES AS OF: 31 DECEMBER 2000
HEADQUARTERS, 26072 MERIT CIRCLE, SUITE 123, LAGUNA HILLS, CA 92653
TEL: 949-582-8888 FAX: 949-582-8887 E-MAIL: AISINEWS@AOL.COM
<Page>
27 April 2001
Lease Investment Flight Trust ("LIFT")
c/o Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890
<Table>
Adjusted Base Value Appraisal for Fleet of 39 Aircraft as of
Subject: 31 December 2000
Lease Investment Flight Trust ("LIFT") Portfolio
AISI File number: A1S007BVO
Ref: (a) Data--Previous AISI Reports A0S053BVO and A0S083BVO
(b) Email messages 30/31 August 2000
(c) Technical Details/Maintenance Status Data Package 30
August 2000
(d) Technical Details/Maintenance Status Data Package 12
March 2001
(e) Technical Details/Maintenance Status Data Package 26
April 2001
</Table>
Ladies and Gentlemen:
Aircraft Information Services, Inc. (AISI) has been requested to offer our
opinion of the adjusted base value appraisal as of 31 December 2000 of the Lease
Investment Flight Trust ("LIFT") portfolio of 39 Aircraft as identified and
defined in Table I and reference (a), (b), (c), (d) and (e) above (the
"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 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.
"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. Our opinion of the adjusted base values of the
Aircraft are derived from information and specifications supplied by the client
in the above referenced (a), (b) and (c) data. No physical inspection of the
Aircraft or their essential records was made by AISI for the purposes of this
report.
<Page>
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. Assumption 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. Current market value assumes that
there is no short term time constraint to buy or sell.
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.
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. VALUATION
Adjustments from half life have been applied based on the current
maintenance status of the Aircraft as indicated in the Aircraft Technical
Details/Maintenance Status sheets supplied to AISI by the client in reference
(a), (b), (c), (d) and (e) above and in accordance with standard AISI methods.
Adjustments are calculated only where there is sufficient information to do so,
or where reasonable assumptions can be made.
With regard to airframe and gear maintenance, if no time between
check/overhaul (TBO) or time since check/overhaul (TSO) information was
provided, and if the total hours/cycles of the airframe do not exceed the TBO
limits then the total hours/cycles of the airframe were assumed to be the TSO.
This was typical of newer aircraft. If no information was provided and if the
TSO could not be calculated, then half life was assumed.
With regard to the engines, on aircraft where all engines total cycles equal
the total cycles of the airframe, the engine's life limit CSOs and overhaul CSOs
are assumed to be the same as the total cycles of the airframe. This is typical
of newer aircraft. Where this assumption can not be made, the engines are
considered to be in half life condition.
All hours and cycle information provided for airframe, C Check, D Check,
engines and gear have been projected from the Aircraft Technical Details /
Maintenance Status sheet dates to 31 December 2000 based on a daily utilization
factor calculated for each aircraft.
It is our considered opinion that the 31 December 2000 adjusted base values
of the Aircraft are as follows in Table I subject to the assumptions,
definitions, and disclaimers herein.
<Page>
TABLE I
<Table>
<Caption>
ADJUSTED
BASE VALUE
31 DEC 2000
NO TYPE MSN DOM ENGINE MTOW US DOLLARS
-- ----------- -------- -------- ------------- -------- --------------
1...................... B767-300ER 29618 May-00 CF6-80C2B7F 412,000 $ 94,160,000
2...................... B767-300ER 30108 Nov-99 CF6-80C2B7F 412,000 $ 89,540,000
3...................... B767-300ER 30112 Sep-99 CF6-80C2B6F 412,000 $ 89,170,000
4...................... B737-300 28672 Jan-98 CFM56-3C1 139,500 $ 33,740,000
5...................... B737-300 28569 Feb-98 CFM56-3C1 139,500 $ 33,830,000
6...................... B737-300 28673 Feb-98 CFM56-3C1 139,500 $ 33,700,000
7...................... B737-300 23384 Aug-87 CFM56-3B2 138,500 $ 19,030,000
8...................... B737-400 24469 Jul-89 CFM56-3C1 142,500 $ 22,900,000
9...................... MD82 49513 Apr-90 JT8D-217A 149,500 $ 18,690,000
10...................... MD82 49515 Oct-90 JT8D-217A 149,500 $ 18,760,000
11...................... MD82 49511 Mar-90 JT8D-217A 149,500 $ 18,580,000
12...................... A320-200 1093 Oct-99 CFM56-5B4 169,750 $ 43,250,000
13...................... A320-200 1108 Nov-99 CFM56-5B4 169,750 $ 43,290,000
14...................... B737-300 23376 Nov-86 CFM56-3B2 138,500 $ 18,790,000
15...................... B737-300 29338 Jul-99 CFM56-3C1 139,500 $ 36,250,000
16...................... B737-400 24512 Sep-89 CFM56-3C1 150,000 $ 22,900,000
17...................... B737-300 28602 Sep-99 CFM56-3C1 139,500 $ 36,550,000
18...................... B737-300 28606 Oct-99 CFM56-3C1 139,500 $ 36,650,000
19...................... A320-200 879 Dec-98 CFM56-5B4 169,750 $ 40,600,000
20...................... MD82 49419 Aug-87 JT8D-217A 149,500 $ 15,830,000
21...................... MD11F 48523 Jun-92 PW4460 630,490 $ 73,040,000
22...................... B737-700 28609 Nov-99 CFM56-7B24 154,500 $ 38,690,000
23...................... B747-400 28427 Mar-98 PW4056 870,490 $ 139,630,000
24...................... MD82 53147 Aug-93 JT8D-217C 149,500 $ 22,150,000
25...................... B737-800 28591 Apr-99 CFM56-7B26 174,200 $ 45,890,000
26...................... B737-800 28628 Jun-00 CFM56-7B26 174,200 $ 49,470,000
27...................... B737-500 28565 Nov-97 CFM56-3C1 133,500 $ 27,270,000
28...................... B737-800 28592 May-99 CFM56-7B26 174,200 $ 45,500,000
29...................... B737-300 28570 Mar-98 CFM56-3C1 139,500 $ 34,170,000
30...................... MD82 49501 Oct-87 JT8D-217A 149,500 $ 16,820,000
31...................... MD82 49509 Aug-89 JT8D-217A 149,500 $ 18,420,000
32...................... MD82 49519 Dec-90 JT8D-217A 149,500 $ 19,400,000
33...................... MD83 49578 Mar-88 JT8D-219 160,000 $ 18,150,000
34...................... MD82 49507 Nov-87 JT8D-217A 149,500 $ 15,910,000
35...................... B767-300ER 26208 Sep-94 PW4060 407,990 $ 68,040,000
36...................... B737-300 28671 Nov-97 CFM56-3C1 139,500 $ 31,540,000
37...................... B737-700 28584 Dec-98 CFM56-7B24 154,500 $ 36,050,000
38...................... A320-200 1152 Feb-00 CFM56-5B4 169,750 $ 45,860,000
39...................... B767-300ER 30110 Dec-99 CF6-80C2B7F 411,990 $ 85,340,000
--------------
TOTALS............................................................................ $1,597,550,000
==============
</Table>
<Page>
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 subject aircraft or
equipment. AISI has no past, present, or anticipated future interest in the
subject aircraft or equipment. 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.
Such conclusions and opinions are judgments that reflect conditions and values
which are 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 parties action or failure to act as a result of reliance or alleged reliance
on this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
John D. McNicol
VICE PRESIDENT
Appraisals & Forecasts
<Page>
BK ASSOCIATES, INC.
1295 NORTHERN BOULEVARD
MANHASSET, NEW YORK 11030
(516) 365-6272 - FAX (516) 365-6287
May 15, 2001
Lease Investment Flight Trust
c/o Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, DE 19890
Gentlemen:
In response to your request, BK Associates, Inc. is pleased to provide this
opinion of the Base Values as of December 31, 2000 on each of 39 commercial jet
transport aircraft (the "Aircraft"), which comprise the Lease Investment Flight
Trust ("LIFT"). The Aircraft are further identified in the attached Figure I by
type, serial number, date of manufacture and engine model.
Set forth below is a summary of the methodology, considerations and
assumptions utilized in this appraisal.
BASE VALUE
Base value is the Appraiser's 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 aircraft's base value is founded in the historical trend of values
and in the projection of future value trends and presumes an arm's 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.
VALUE METHODOLOGY
As the definition suggests, Base Value is determined from historic and
future value trends and is not influenced by current market conditions. It is
often determined as a function of the original cost of the aircraft, technical
characteristics of competing aircraft, and development of new models. BK
Associates has determined from analysis of historic data, a relationship between
aircraft age and its value as a percentage of original value for the average
aircraft. These data form the basis for base value and forecast value
determinations but must be adjusted to reflect the value of engine and gross
weight options and other features of the aircraft.
Our maintenance adjusted Base Values include appropriate financial
adjustments based on our interpretation of the maintenance status data provided
by GE Capital Aviation Services ("GECAS").
LIMITING CONDITIONS AND ASSUMPTIONS
BK has not inspected the Aircraft nor their maintenance records but relied
upon information supplied by GECAS and from BK's own database. In determining
our values, the following assumptions apply to the aircraft:
1. Our maintenance adjustments are approximate, based on industry
average costs, and normally include an adjustment for the time remaining to a
"C" check, time remaining to a "D" check, time remaining to landing gear
overhaul and time remaining to a heavy shop visit on engines. Instances where
insufficient data was available we assumed a half-time condition existed, and
instances where engines were reported at a repair facility we valued that engine
as fresh or zero-time since overhaul.
<Page>
2. The aircraft is in compliance with a civil airworthiness authority
approved airline maintenance program, with all airworthiness directives,
mandatory modifications and applicable service bulletins currently up to
industry standard.
3. The interior of the aircraft is in a standard configuration for its
specific type, with the buyer furnished equipment and options of the types and
models generally accepted and utilized in the industry.
4. The aircraft is in current flight operations.
5. The aircraft is sold for cash without seller financing.
6. The aircraft is in average or better condition.
7. No accident damage has been incurred that would affect market
values.
CONCLUSIONS
Based on the above methodology, considerations and assumptions, it is our
opinion that the current base value in U.S. dollars of each aircraft as of
December 31, 2000, including appropriate financial adjustments considering the
maintenance status of the Aircraft, is as shown in Figure I attached hereto.
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.
Sincerely yours,
BK ASSOCIATES, INC.
R. L. Britton
VICE PRESIDENT
ISTAT SENIOR CERTIFIED APPRAISER
RLB/kf
Attachment
<Page>
FIGURE I
LEASE INVESTMENT FLIGHT TRUST ("LIFT")
AIRCRAFT PORTFOLIO
AS OF DECEMBER 31, 2000
<Table>
<Caption>
MAINTENANCE
ADJUSTED
AIRCRAFT SERIAL MGF. BASE VALUE
NO. TYPE NUMBER DATE ENGINE TYPE ($MIL)
--- ----------- -------- -------- ------------- -----------
1.................................. A320-200 879 Dec-98 CFM56-5B4 39.760
2.................................. A320-200 1093 Oct-99 CFM56-5B4 41.690
3.................................. A320-200 1108 Nov-99 CFM56-5B4 41.910
4.................................. A320-200 1152 Feb-00 CFM56-5B4 43.160
5.................................. B737-300 23376 Nov-86 CFM56-3B2 16.540
6.................................. B737-300 23384 Aug-87 CFM56-3B2 16.250
7.................................. B737-300 28671 Nov-97 CFM56-3C1 31.240
8.................................. B737-300 28672 Jan-98 CFM56-3C1 32.970
9.................................. B737-300 29338 Jul-99 CFM56-3C1 34.670
10................................. B737-300 28673 Feb-98 CFM56-3C1 31.850
11................................. B737-300 28602 Sep-99 CFM56-3C1 34.920
12................................. B737-300 28606 Oct-99 CFM56-3C1 35.140
13................................. B737-300 28570 Mar-98 CFM56-3C1 32.320
14................................. B737-300 28569 Feb-98 CFM56-3C1 32.160
15................................. B737-400 24469 Jul-89 CFM56-3C1 22.810
16................................. B737-400 24512 Sep-89 CFM56-3C1 22.130
17................................. B737-500 28565 Nov-97 CFM56-3C1 26.500
18................................. B737-700 28584 Dec-98 CFM56-7B24 35.130
19................................. B737-700 28609 Nov-99 CFM56-7B24 37.340
20................................. B737-800 28591 Apr-99 CFM56-7B26 40.300
21................................. B737-800 28592 May-99 CFM56-7B26 40.700
22................................. B737-800 28628 Jun-00 CFM56-7B26 42.780
23................................. B747-400 28427 Mar-98 PW4056 141.040
24................................. B767-300ER 30112 Sep-99 CF6-80C2B6F 83.490
25................................. B767-300ER 26208 Sep-94 PW4060 64.440
26................................. B767-300ER 29618 May-00 CF6-80C2B7F 87.100
27................................. B767-300ER 30108 Nov-99 CF6-80C2B7F 85.230
28................................. B767-300ER 30110 Dec-99 CF6-80C2B7F 85.580
29................................. MD11F 48523 Jun-92 PW4460 74.860
30................................. MD82 49501 Oct-87 JT8D-217A 16.710
31................................. MD82 49509 Aug-89 JT8D-217A 18.460
32................................. MD82 49513 Apr-90 JT8D-217A 18.290
33................................. MD82 49515 Oct-90 JT8D-217A 17.940
34................................. MD82 53147 Aug-93 JT8D-217C 22.700
35................................. MD82 49519 Dec-90 JT8D-217A 19.920
36................................. MD82 49419 Aug-87 JT8D-217A 15.250
37................................. MD82 49511 Mar-90 JT8D-217A 17.810
38................................. MD82 49507 Nov-87 JT8D-217A 16.590
39................................. MD83 49578 Mar-88 JT8D-219 18.030
--------
TOTAL............................................................................. 1535.710
========
</Table>
<Page>
MORTEN BEYER & AGNEW
AVIATION CONSULTING FIRM
APPRAISAL OF 39 AIRCRAFT
PREPARED FOR:
LEASE INVESTMENT FLIGHT TRUST ("LIFT")
MAY 15, 2001
<Table>
WASHINGTON, D.C. LONDON PACIFIC RIM
2107 WILSON BLVD. LAHINCH 62, LASHMERE 3-16-16 HIGASHIOOI
SUITE 750 COPTHORNE SHINAGAWA-KU
ARLINGTON, VIRGINIA 22201 WEST SUSSEX TOKYO 140-0011
UNITED STATES UNITED KINGDOM JAPAN
PHONE +703 276 3200 PHONE +44 1342 716248 PHONE +81 337636845
FAX +703 276 3201 FAX +44 1342 718967
</Table>
1
<Page>
I. INTRODUCTION AND EXECUTIVE SUMMARY
MORTEN BEYER & AGNEW (MBA) has been retained by Lease Investment Flight
Trust ("LIFT") to determine the Current Adjusted Base Value of 39 aircraft in
their present configuration as passenger or cargo aircraft. The aircraft and the
respective Current Adjusted Base Value of the aircraft are identified in
Section III of this report.
In performing this valuation, MBA did not independently inspect the aircraft
and the associated records and documentation associated with each aircraft. MBA
relied solely upon the technical data and maintenance status of the aircraft
provided by GE Capital Aviation Services ("GECAS").
Section II of this report presents definitions of various terms, including
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.
Based on the information set forth in this report, it is our opinion as of
DECEMBER 31, 2000 that the Current Adjusted Base Value of this fleet of aircraft
is $1,521,214,000 based on the respective adjustments noted in Section IV of
this report.
II. DEFINITIONS
CURRENT MARKET VALUE
ISTAT defines Current Market Value (CMV) as the appraiser's opinion of the
most likely trading price that may be generated for an asset under market
circumstances that are perceived to exist at the time in question. Current
Market Value assumes that the asset is valued for its highest, best use, and the
parties to the hypothetical sale transaction are willing, able, prudent and
knowledgeable and under no unusual pressure for a prompt transaction. It also
assumes that the transaction would be negotiated in an open and unrestricted
market on an arm's-length basis, for cash or equivalent consideration, and given
an adequate amount of time for effective exposure to prospective buyers.
Market Value of a specific asset will tend to be consistent with its Base
Value in a stable market environment. In situations where a reasonable
equilibrium between supply and demand does not exist, trading prices, and
therefore Market Values, are likely to be at variance with the Base Value of the
asset. Market Value may be based upon either the actual (or specified) physical
condition or maintenance time or condition status of the asset, or alternatively
upon an assumed average physical condition and mid-life, mid-time maintenance
status.
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 Appraiser's 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, unrestricted, stable
market environment with a reasonable balance of supply and demand. Full
consideration is assumed of its "highest and best use". An asset's Base Value is
founded in the historical trend of values and in the projection of value trends
and presumes an arm's-length, cash transaction between willing, able, and
knowledgeable parties, acting prudently, with an absence of
2
<Page>
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 its 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.
III. CURRENT MARKET CONDITIONS
AIRBUS A-320-200
The A320 was Airbus' first all new design since the launch of the original
A300 in 1971. The program was initiated in 1983 and logged almost 400 orders
prior to first delivery in 1988. The A320 is now offered with both the CFM-56
and the IAE V-2500 engine, with the CFM version having a long head start, but
the V2500 gaining. At 11/30/00, 848 A320s have been delivered and 550 more are
on order. The A320 has achieved a wide market base on all continents, with a
total of 89 current operators.
Other carriers, including Air France Groupe and Lufthansa, have each ordered
six types of Airbus aircraft, and currently operate 116 and 114 Airbus aircraft
respectively, and other major European operators are Swissair (54) and Iberia
(46). However, the European influence might tilt decision-makers at airlines
such as these. Airbus believes its concept will give its new designs significant
advantages over Boeing aircraft, and the 1999 order books indicate it is doing
just that. MBA believes the combination of extremely efficient designs and the
inherent savings in training and other costs make the Airbus family an
attractive avenue for an entire fleet refurbishment, as US Airways' commitment
for 400-some aircraft (including options) appears to justify.
The A320 family incorporates an increased amount of composites in its
secondary structure compared to older jets, a complete fly-by-wire control
system, and a computerized flight management system which, when engaged,
virtually precludes putting the aircraft into stalls or other extreme
conditions. This system has been blamed by some for two early incidents in which
the crews placed the aircraft in an untenable position close to the ground with
the system disconnected and from which it was unable to recover. These two
aircraft were totally cleared by the airworthiness authorities, as well as one
involved in a third incident in which the crew made a below-minimum approach in
bad weather and struck high ground. The third aircraft had no ground proximity
warning device installed, a device now required by the French government and
long required by many others. In general, all these components have held up well
in service, and the reliability of the aircraft has been excellent.
The A320 also offers the advantage of being able to carry seven LD-3 cargo
containers--a feat not even the B-767 can perform. The fuselage is approximately
10 inches wider than that of the B-727/B-737/B-757 series, offering wider aisles
and roomier seats--a feature much appreciated by passengers. There are no cargo
or Combi models currently offered by Airbus, although such a configuration is
obviously possible. The only exception is the A300 "Beluga' an outsized special
cargo aircraft, which is already being leased for commercial applications but is
primarily in service for Airbus.
ECONOMICS
The A320 vies with the B-757 for the most efficient aircraft in service.
Fuel efficiency, new technology design and low operating cost parameters all
combine to give this aircraft among the lowest seat mile costs of any being
built or in service. MBA believes this model will produce very attractive
operating and net ratios well into the next century.
3
<Page>
BOEING 737-300/400/500
As Stage 3 noise rules closed in at last on the B-737-200, Boeing re-engined
the aircraft with the CFM-56 engine, which met the noise rules and also offered
higher power and the opportunity to stretch both the fuselage (capacity) in the
-400 model and the range. They also built the model -500, which kept the basic
-200 configuration. The B-737-300 was introduced in the early 1980s, and entered
service in 1984, several years behind the MD-80 which was already achieving
extensive orders, again giving the lead to Douglas.
As of October 2000, Boeing had delivered 1,988 of these re-engined 2nd
Generation series, as the last -300 rolled out the door at Renton. Success was
quick for the 2nd or "Current" Generation production B-737s, as they found homes
in fleets already populated with the -100s and -200s. The aircraft particularly
suited the deregulated American market, where smaller planes fitted
hub-and-spoke operations. Overall, more than 100 airlines have selected the
Current Generation B-737 to meet their growth/replacement needs. As airline
consolidation continues, however, and as limited slot, gate, runway, and
terminal facilities impede growth, we look to the airlines to turn to larger
aircraft. This, in short, means that not all B-737 operators will upgrade with
the newer 3rd Generation (-600/-700/-800/-900) models. The introduction of the
-600/-700/-800/-900 series has preempted incoming orders for the current family
(there were eight B-737-300/400/500 orders during 1999, and production and has
ceased). The orders for Next Generation (NG) now stand at 1,972 of which 391
were received last year. This was the bright spot in Boeing's 2000 order
picture. We suspect a good number of the orders for the -700/-800 will be
converted to the -900 as time goes by. Eighty percent of American's 630-plane
commitment to Boeing was for B-737s.
Geographically, 90% of the Current Generation 737's are concentrated
primarily in North America, Europe and the Pacific Rim, with the remaining 10%
scattered throughout Africa, Asia and South America, and one operator with one
aircraft in the Middle East.
The 737-300/-400/-500 series is fully compliant with all current noise and
environmental regulations, and has a wide margin of tolerance sufficient to meet
Stage 4.
ECONOMICS
The MBA Model indicates good operating economics for the 737-300 and
particularly the higher capacity -400. The -500 is quite marginal on a
comparable basis due to its lack of seat capacity and, therefore, lack of
earning power. It was built to be a niche aircraft, and it is going to have to
stay in its niche.
BOEING 737-600/700/800/900
LN-RPH
Boeing began replacing the trio of B-737-300/-400/-500s with upgraded new
generation versions beginning with the B-737-700 in 1997. Southwest Airlines'
order for 63 of the series officially launched the program in late 1993, and
with their most recent order of 94 with options for another 196 have secured the
future of the program.
The fuselage of these "Next Generation" (NG) aircraft mirror that of the
first generation (which were out-growths of the original -100s and -200s).
Upgraded avionics, a new wing design, and other improvements combine to increase
range, efficiency, and performance in general. The CFM56-7 is the exclusive
engine for the NG series. However, Boeing is losing market share to the more
comfortable, wider A320 family.
Prospects for the 3rd generation B-737 jets were thought to be considerably
enhanced by the discontinuation of the MD-80/-90 series. The MD-95 has been
adopted by Boeing as its 100-seat
4
<Page>
competitor under the aegis of B-717, competing with its own B-737-600. Airbus is
becoming more aggressive with its A318/319/320/321 high-tech series and winning
an increasing share of orders. During 2000 Airbus had 388 narrowbody orders,
Boeing had 455.
The Boeing 737NG aircraft are actually starting to compete with their older
and larger sibling, the Boeing 757. Airlines such as Aloha and Southwest are
finding the flexibility and the range offered by the 737-700 to fit very well
with their respective trans-pacific and trans-continental routes. Delta has
replaced their 757's with 737-800 aircraft on their routes to Central America.
While the 737s are allowing for greater economics, the success will ultimately
depend upon passenger preferences and tolerances for smaller cabins over longer
journeys.
As the industry passes the peak of the current cycle, the prospects for a
downturn increase, together with deferrals and cancellations of orders for both
manufacturers.
BOEING 747-400
9M-MPK
The B-747-400 is the current state-of-the-art model of the 747 family. It is
offered with all three engine manufacturers' power plants in passenger, Combi,
and cargo models. 535 -400s have been built as of November 2000, and 66 remain
on order. The aircraft incorporates all of the design improvements developed
over the life of the 747 program, including the extended upper deck, a two-pilot
glass cockpit, a gross weight of 883,000 pounds at takeoff, and a range of up to
8,000 statute miles. The operator list is surprisingly thin in terms of numbers
of airlines, but some individual fleets are huge. There are currently 39
operators of the 747-400, however, after mega-carriers like British Airways
announced the partial removal of the -400 from their fleet, there is guaranteed
to be some shifting. Recently, Virgin Atlantic announced it will be taking
delivery of 5 more -400's to add to their current fleet of 6 -400 aircraft.
These aircraft were originally slated for Alitalia. A low gross weight,
high-density model, designated as the -400D, is also offered and is being used
in the Japanese domestic market.
The continuing flow of new B-747-400s has created a surplus of older
B-747-100s, -200s, and -300s on the market. Until recently the new -400s have
gone to meet the pent-up demand for capacity. Half of the aircraft in service
and on order are operated by Pacific Rim carriers, not including the 58 operated
by United and Northwest for the same area and the fleets of the European
carriers which will be deployed on Pacific routes where demand is recovering.
We consider the long-term value of the 747-400 series to be virtually
bulletproof, even when Airbus builds its A380. Although it has suffered in the
short term because of forced sales in a down market, its operational
capabilities, strong development history, and large market presence assure it a
leading role in the aircraft market for the next several decades. Boeing has
marketed several other variations of the 747-400 including extended range and
stretch models, but none have been ordered to date.
ECONOMICS
The MBA Economic Model shows both the new B-747-400 all-passenger and Combi
models to have high operating margins, that are largely offset at the net level
by the high costs of ownership. This effectively mandates utilization in long
haul, high utilization markets which, of course, is what the aircraft was built
for. But in the event of low load factors and/or yields, the heavy financial
burden will be felt more strongly than with a cheaper, older aircraft.
5
<Page>
BOEING 767-300 ER
The twin-aisle semi-widebody B-767 was launched in 1978 and entered service
in 1982. The aircraft has undergone significant development in terms of gross
weight and capacity, affecting payload and range. The initial model, the
B-767-200, offered a MTOGW of 280,000 pounds, while the current 767-300ER is
certified at 412,000 pounds. Early development of the Extended Range ("ER")
extended the range of the -200, enabling it to fly the Atlantic nonstop. Initial
routings were circuitous, since the aircraft had to stay within 90 minutes of a
landing place. But as experience was gained, the FAA and international
authorities approved ETOPS (extended range twin-engine over water operations),
and more direct routes became possible. The first production models of the
larger 767-300 were delivered in 1986 in domestic configuration, soon to be
followed by successively higher gross weight ER models.
Orders for the -200 slowed to a trickle following the introduction of the
-300, and it is probable that production of this model will be discontinued in
the near future, despite Continental's recent order. Much of the success of the
B-767 program is attributable to ETOPS operations, where these aircraft (as well
as the A310) have replaced B-747s, DC-10s, MD11s and L-1011s on many long
flights. The 767 has an exemplary overall safety record, with only three flight
accidents--one attributed to inadvertent thrust reverser deployment on a Lauda
Air 767-300 over Bangkok, one Ethiopian -200 lost in a hijacking incident in the
Comoro Islands in 1996, and the third was the recent Egypt Air accident off the
coast of Nantucket.
ECONOMICS
The MBA Model indicates that it is hard to make money with the B-767.
Satisfactory margins are achieved only by classifying the B-767 as a narrowbody
in terms of seating capacity. MBA has assumed that only 67.5 percent of maximum
certified seating is installed in a widebody, compared to 85 percent in a
narrowbody. This is in accord with industry experience. By making this
narrowbody assumption, we increased the available seating of the B-767-300 from
218 to 247.
MBA has classified the aircraft as having seven-abreast seating.
Interestingly, British tour operators utilize the aircraft in an eight-abreast
configuration, thus increasing potential maximum seating from 290 seats in our
model to 375 seats claimed by Boeing. With 375 seats, the B-767-300 becomes a
potent economic competitor. However, until the industry shows more signs of
utilizing this capability we will continue to use the conventional capacity.
BOEING/DOUGLAS MD11
Freighter
HL7371
The MD11 was first ordered in 1986 and entered service at the end of 1990.
The aircraft is a slightly larger version of the DC-10-30, with 45,000 pounds
greater gross weight. The range is extended 1,000 miles to a maximum
full-payload range of 7,000 miles. The aircraft was offered in passenger, cargo,
and combi versions, and is equipped with the more fuel efficient PW 4460/4462
and GE CF6-80C2D1F engines.
Early operational problems likely cost Douglas some of the inherent
advantages of introducing the MD11 long before the A330/340 and 777. Fuel
consumption of the MD11 has been about eight percent higher than guaranteed,
although is still lower than older DC-10s. One operator (Garuda) terminated its
MD11 orders for this reason.
The MD11 is proving to be a better freighter than a passenger aircraft. An
increasing number of passenger models are being converted to all-cargo led by
American's 19-plane sale to FedEx. Recently, Boeing announced its purchase of
25-30 MD11's to be converted for UPS. This transaction increases the operator
base for this aircraft which reinforces its position as a viable freighter.
6
<Page>
Boeing's election to suspend the production of Douglas commercial aircraft
entirely has adversely affected the value of used models. Even though the
Douglas Division will fully support their aircraft with spares and engineering,
there is always a negative implication when aircraft become orphans, especially
when only 192 are in current operation.
ECONOMICS
The MD11 has proved to be a better cargo aircraft than passenger plane.
Sixty-five are already in cargo configuration. When the FedEx and UPS programs
are completed, more than fifty percent of the entire MD11 fleet will be
all-cargo. With a 200,000 pound payload, good cube, and long range, the MD11
Freighter makes sense for a limited number of cargo operators, but not for the
likes of Northern Air Cargo or Fine Air who operate in the long haul air cargo
markets and use lower cost, older aircraft such as the B-747-100F, DC-8, or
L-1011.
BOEING/DOUGLAS MD82/83
XA-AMP
The Boeing MD-80 family of relatively quiet and fuel-efficient twinjets was
initially certified by the Federal Aviation Administration in August 1980, and
the first aircraft of the series entered airline service in October 1980. The
final aircraft, an -83 model, was delivered to Trans World Airlines in
December 1999. This ended a nineteen-year production run of 1,212 aircraft. Of
those built, 1,179 remain in operation today; three have been retired, 21 are
currently parked, and 12 have been destroyed.
The MD-80's Pratt & Whitney JT8D-200 Series engines, combined with its
efficient aerodynamic design, allow it to meet all current Stage III noise
regulations while incurring operating costs that are among the lowest in the
commercial aviation industry.
MD-80's are rugged and proven aircraft, well liked by flight crews for their
excellent handling characteristics, and appreciated by maintenance personnel for
their mechanical reliability, simplicity and relatively low maintenance costs.
The MD-80 series of aircraft have an excellent operational safety record;
combined with MD-90s, the type has a very low "hull loss" accident rate of 0.43
per million departures.
MD-80 Series operators range from the largest foreign and domestic trunk
carriers to new startup airlines and charter operators. American Airlines
operates the largest fleet of MD-80s, with a fleet of 274. The large number in
operation worldwide ensures that support is widely available and economical.
Highly reliable MD-80 series aircraft fly to more than 420 airports
worldwide, with 4,800 daily flights. They have flown more than 36 million hours
and 24 million flights since entering service in 1980, covering over 13 billion
miles, carrying more than 1.9 billion passengers.
Early MD-80 models were built with conventional flight instruments. Later
variants were delivered equipped with four-tube Honeywell Electronic Flight
Instrument Systems ("EFIS") suites.
STAGE III NOISE REGULATIONS--
All of the above aircraft comply with the currently effective Stage
III/Chapter III aircraft noise limitations, based on the information provided.
However, the FAA and ICAO are currently planning the adoption of more stringent
Stage IV noise regulations. The severity of the proposed new regulations
currently stands at a 10 decibel reduction, however, the implementation schedule
has not been determined nor the phase-out requirements. When enacted and
effective these new regulations may limit the continued utilization of the
subject aircraft in most areas of the world.
7
<Page>
IV. VALUATION
In developing the Current Adjusted Base Value of this aircraft, MBA did not
inspect the aircraft or verify their historical maintenance documentation, but
relied on partial information supplied by GECAS. 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 are as follows, FOR EACH AIRCRAFT:
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, 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. No accounting is made for lease revenues, obligations or terms of
ownership unless otherwise specified.
8
<Page>
LEASE INVESTMENT FLIGHT TRUST ("LIFT")
<Table>
<Caption>
AIRCRAFT ENGINE MTOW DATE OF
NO. SERIAL # TYPE TYPE (LBS) AIRFRAME MANUFACTURE LESSEE NAME
--- --------- ----------- ------------- -------- ----------- ------------- ------------------------
1 29618 B767-300ER CF6-80C2B7F 412,000 Widebody 05/09/2000 Air 2000
2 30108 B767-300ER CF6-80C2B7F 412,000 Widebody 11/01/1999 Air Canada
3 30112 B767-300ER CF6-80C2B6F 411,990 Widebody 09/14/1999 Air Canada
4 28672 B737-300 CFM56-3C1 139,500 Narrowbody 01/09/1998 Air France
5 28673 B737-300 CFM56-3C1 139,500 Narrowbody 02/16/1998 Air France
6 28569 B737-300 CFM56-3C1 139,500 Narrowbody 02/20/1998 Air France
7 23384 B737-300 CFM56-3B2 138,500 Narrowbody 08/14/1987 America West
8 24469 B737-400 CFM56-3C1 142,500 Narrowbody 07/01/1989 Asiana Airlines
9 49513 MD82 JT8D-217A 149,500 Narrowbody 04/01/1990 China Eastern
10 49515 MD82 JT8D-217A 149,500 Narrowbody 10/09/1990 China Eastern
11 49511 MD82 JT8D-217A 149,500 Narrowbody 03/31/1990 China Eastern
12 1093 A320-200 CFM56-5B4 169,750 Narrowbody 10/26/1999 China Eastern
13 1108 A320-200 CFM56-5B4 169,750 Narrowbody 11/16/1999 China Eastern
14 23376 B737-300 CFM56-3B2 138,500 Narrowbody 11/01/1986 Delta Air Lines
15 29338 B737-300 CFM56-3C1 139,500 Narrowbody 07/07/1999 easyJet Airline Co. Ltd
16 24512 B737-400 CFM56-3C1 150,000 Narrowbody 09/01/1989 Garuda Indonesia
17 28602 B737-300 CFM56-3C1 139,500 Narrowbody 09/10/1999 Go Fly Limited
18 28606 B737-300 CFM56-3C1 139,500 Narrowbody 10/21/1999 Go Fly Limited
19 879 A320-200 CFM56-5B4 169,754 Narrowbody 12/15/1998 Iberworld
20 49419 MD82 JT8D-217A 149,500 Narrowbody 08/12/1987 Korean Airlines
21 48523 MD11F PW4460 630,490 Freighter 06/30/1992 Korean Airlines
22 28609 B737-700 CFM56-7B24 154,500 Narrowbody 11/18/1999 Jet Airways
23 28427 B747-400 PW4056 870,490 Widebody 03/03/1998 Malaysian Airline System
24 53147 MD82 JT8D-217C 149,500 Narrowbody 08/15/1993 Nouvelair Tunisie
25 28591 B737-800 CFM56-7B26 174,200 Narrowbody 04/05/1999 Pegasus
26 28628 B737-800 CFM56-7B26 174,200 Narrowbody 06/02/2000 Pegasus
27 28565 B737-500 CFM56-3C1 133,500 Narrowbody 11/11/1997 Rio Sul
28 28592 B737-800 CFM56-7B26 174,200 Narrowbody 05/01/1999 Royal Air Maroc
29 28570 B737-300 CFM56-3C1 139,500 Narrowbody 03/27/1998 SATA--Air Acores
30 49501 MD82 JT8D-217A 149,500 Narrowbody 10/29/1987 Spanair
31 49509 MD82 JT8D-217A 149,500 Narrowbody 08/14/1989 Spanair
32 49519 MD82 JT8D-217A 149,500 Narrowbody 12/01/1990 Spanair
33 49578 MD83 JT8D-219 160,000 Narrowbody 03/16/1988 Spanair
34 49507 MD82 JT8D-217A 149,500 Narrowbody 11/29/1987 Spanair
35 26208 B767-300ER PW4060 407,990 Widebody 09/08/1994 TWA (American Airlines)
36 28671 B737-300 CFM56-3C1 139,500 Narrowbody 11/18/1997 VARIG
37 28584 B737-700 CFM56-7B24 154,500 Narrowbody 12/28/1998 VARIG
38 1152 A320-200 CFM56-5B4 169,754 Narrowbody 02/03/2000 Volare
39 30110 B767-300ER CF6-80C2B7F 411,990 Widebody 12/15/1999 Aeroflot
<Caption>
NOISE ADJUSTED
NO. COMPLIANCE BASE VALUE
--- ------------ -------------
1 Stage III 85,435,000
2 Stage III 83,990,000
3 Stage III 83,310,000
4 Stage III 28,380,000
5 Stage III 28,490,000
6 Stage III 28,804,000
7 Stage III 15,190,000
8 Stage III 22,100,000
9 Stage III 20,140,000
10 Stage III 21,134,000
11 Stage III 21,120,000
12 Stage III 42,780,000
13 Stage III 42,940,000
14 Stage III 15,210,000
15 Stage III 30,650,000
16 Stage III 21,240,000
17 Stage III 30,950,000
18 Stage III 31,100,000
19 Stage III 41,097,000
20 Stage III 17,630,000
21 Stage III 77,100,000
22 Stage III 33,210,000
23 Stage III 144,930,000
24 Stage III 23,470,000
25 Stage III 41,090,000
26 Stage III 42,949,000
27 Stage III 25,660,000
28 Stage III 41,130,000
29 Stage III 28,240,000
30 Stage III 18,950,000
31 Stage III 20,290,000
32 Stage III 21,630,000
33 Stage III 20,150,000
34 Stage III 18,900,000
35 Stage III 63,920,000
36 Stage III 27,770,000
37 Stage III 31,790,000
38 Stage III 43,955,000
39 Stage III 84,390,000
-------------
1,521,214,000
=============
</Table>
9
<Page>
VI. COVENANTS
This report has been prepared for the exclusive use of LIFT and shall not be
provided to other parties by MBA without the express consent of LIFT. MBA
certifies that this report has been independently prepared and that it fully and
accurately reflects MBA's opinion as to the Current Adjusted Base Value. 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.
This report represents the opinion of MBA as to the Current Adjusted Base
Value of the subject aircraft 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 LIFT or any other party with regard to the subject
aircraft. By accepting this report, all parties agree that MBA shall bear no
such responsibility or legal liability.
This report has been prepared by:
Bryson P. Monteleone
DIRECTOR OF OPERATIONS
Reviewed by:
Morten S. Beyer, APPRAISER FELLOW
CHAIRMAN & CEO
ISTAT CERTIFIED SENIOR APPRAISER
May 15, 2001
10
<Page>
$1,369,000,000
LEASE INVESTMENT FLIGHT TRUST
PROSPECTUS
OFFER TO EXCHANGE
CLASS A-1 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS A-2 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS A-3 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS B-1 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS B-2 FIXED RATE ASSET BACKED NOTES, SERIES 2001-1,
CLASS C-1 FLOATING RATE ASSET BACKED NOTES, SERIES 2001-1
AND
CLASS C-2 FIXED RATE ASSET BACKED NOTES, SERIES 2001-1
, 2001
<Page>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended and Restated Trust Agreement (the "Trust Agreement") of Lease
Investment Flight Trust dated as of June 26, 2001 provides that Lease Investment
Flight Trust will indemnify, to the fullest extent permitted by Delaware law,
each trustee (and the officers, directors, employees, heirs, executors or
administrators of each trustee) who was or is a party or is threatened to be
made a party to, or is involved in any threatened, pending or completed action
or suit by or in the right of Lease Investment Flight Trust to procure a
judgment in its favor by reason of the fact that such person is or was a trustee
of Lease Investment Flight Trust or is or was serving at the request of Lease
Investment Flight Trust as a trustee, director or officer of another trust,
corporation, partnership, joint venture or other enterprise. Lease Investment
Flight Trust also agreed to indemnify, to the fullest extent permitted by
Delaware law, each trustee of Lease Investment Flight Trust from any and all
losses, liabilities or expenses that may be imposed on, incurred by or asserted
against any of them arising out of, in connection with or related to their
performance under the Trust Agreement.
ITEM 21. EXHIBITS
(a) Exhibits
The following is a list of exhibits to this Registration Statement:
<Table>
<Caption>
EXHIBIT
NO.
-------
3.1 Amended and Restated Trust Agreement of Lease Investment
Flight Trust dated as of June 26, 2001.*
4.1 Indenture dated as of June 26, 2001 between Lease Investment
Flight Trust, Phoenix American Financial Services, Inc.,
LIFT Trust-Sub 1 and Bankers Trust Company.*
4.2 Form of Global Note (included in Exhibit 4.1).*
4.3 Registration Rights Agreement dated as of June 26, 2001
between Lease Investment Flight Trust and Credit Suisse
First Boston Corporation.*
5.1 Opinion of Milbank, Tweed, Hadley & McCloy LLP as to the
legality of the securities being registered hereby.*
5.2 Opinion of Morris, James, Hitchens & Williams as to the
legality of the securities being registered hereby.*
8. Opinion of Milbank, Tweed, Hadley &McCloy LLP as to certain
U.S. Federal income tax matters. (included in Exhibit 5.1)*
10.1 Asset Purchase Agreement, dated as of June 26, 2001 among
General Electric Capital Corporation, the Sellers listed on
Annex A thereto and LIFT Trust-Sub 1.*
10.2 Security Trust Agreement dated as of June 26, 2001 between
Lease Investment Flight Trust, Bankers Trust Company, LIFT
Trust-Sub 1 and the other parties referred to therein.*
10.3 Servicing Agreement dated as of June 26, 2001 among GE
Capital Aviation Services, Limited and Lease Investment
Flight Trust.*
10.4 Administrative Agency Agreement dated as of June 26, 2001
between Bankers Trust Company, Lease Investment Flight
Trust, Phoenix American Financial Services, Inc. and the
issuer subsidiaries identified therein.*
10.5 Reference Agency Agreement dated as of June 26, 2001 between
Bankers Trust Company, Lease Investment Flight Trust and
Phoenix American Financial Services, Inc.*
10.6 Master Swap Agreement and Schedule dated as of June 26, 2001
between Lease Investment Flight Trust and Credit Suisse
First Boston International.*
</Table>
II-1
<Page>
<Table>
<Caption>
EXHIBIT
NO.
-------
10.7 Beneficial Interest Purchase Agreement dated as of June 26,
2001 between Lease Investment Flight Trust and Automatic
LIFT I, LP.*
21. Subsidiaries of Lease Investment Flight Trust.*
23.1 Consent of Milbank, Tweed, Hadley & McCloy LLP (included in
Exhibit 5.1).*
23.2 Consent of Morris, James, Hitchens & Williams (included in
Exhibit 5.2).*
23.3 Consent of Aircraft Information Services, Inc.*
23.4 Consent of BK Associates, Inc.*
23.5 Consent of Morton, Beyer & Agnew.*
23.6 Consent of PricewaterhouseCoopers LLP.*
23.7 Consent of Paul, Hastings, Janofsky & Walker LLP.*
23.8 Consent of Simat, Helliesen & Eichner.*
25.1 Statement of Eligibility and Qualification of Trustee on
Form T-1 of Bankers Trust Company of New York under the
Trust Indenture Act of 1939.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Letter to Clients; Form of Instructions to
Registered Holder and/or Book-Entry Transfer Facility
Participant from Lease Investment Flight Trust.*
99.4 Appraisal of Aircraft Information Services, Inc.*
99.5 Appraisal of BK Associates, Inc.*
99.6 Appraisal of Morton, Beyer & Agnew.*
</Table>
------------------------
* Filed herewith
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
The undersigned registrant hereby undertakes to file, during any period in
which offers or sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
II-2
<Page>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually, or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
II-3
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Lease Investment
Flight Trust has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
<Table>
LEASE INVESTMENT FLIGHT TRUST
by Wilmington Trust Company,
not in its individual capacity but
solely as the Owner Trustee
By: /s/ DAVID A. VANASKEY, JR.
-----------------------------------------
Name: David A. Vanaskey, Jr.
Title: VICE PRESIDENT
</Table>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of Lease Investment Flight Trust and in the capacities and on the dates
indicated.
<Table>
<Caption>
NAME TITLE DATE
---- ----- ----
/s/ JOSEPH E. FRANCHT, JR.
------------------------------------------- Controlling Trustee September 21, 2001
Joseph E. Francht, Jr.
/s/ JONATHAN M. SCHOFIELD
------------------------------------------- Controlling Trustee September 21, 2001
Jonathan M. Schofield
/s/ DAVID H. TREITEL
------------------------------------------- Controlling Trustee September 21, 2001
David H. Treitel
/s/ DAVID A. VANASKEY, JR.
-------------------------------------------
Wilmington Trust Company, not in its Owner Trustee September 21, 2001
individual capacity but as
the Owner Trustee
</Table>
II-4
<Page>
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NO.
-------
3.1 Amended and Restated Trust Agreement of Lease Investment
Flight Trust dated as of June 26, 2001.*
4.1 Indenture dated as of June 26, 2001 between Lease Investment
Flight Trust, Phoenix American Financial Services, Inc.,
LIFT Trust-Sub 1 and Bankers Trust Company.*
4.2 Form of Global Note (included in Exhibit 4.1).*
4.3 Registration Rights Agreement dated as of June 26, 2001
between Lease Investment Flight Trust and Credit Suisse
First Boston Corporation.*
5. Opinion of Morris, James, Hitchens & Williams as to the
legality of the securities being registered hereby.*
8. Opinion of Milbank, Tweed, Hadley & McCloy LLP as to certain
U.S. Federal income tax matters.*
10.1 Asset Purchase Agreement dated as of June 26, 2001 among
General Electric Capital Corporation, the Sellers listed on
Annex A thereto and LIFT Trust-Sub 1.*
10.2 Security Trust Agreement dated as of June 26, 2001 between
Lease Investment Flight Trust, Bankers Trust Company, LIFT
Trust-Sub 1 and the other parties referred to therein.*
10.3 Servicing Agreement dated as of June 26, 2001 among GE
Capital Aviation Services, Limited and Lease Investment
Flight Trust.*
10.4 Administrative Agency Agreement dated as of June 26, 2001
between Bankers Trust Company, Lease Investment Flight
Trust, Phoenix American Financial Services, Inc. and the
issuer subsidiaries identified therein.*
10.5 Reference Agency Agreement dated as of June 26, 2001 between
Bankers Trust Company, Lease Investment Flight Trust and
Phoenix American Financial Services, Inc.*
10.6 Master Swap Agreement and Schedule dated as of June 26, 2001
between Lease Investment Flight Trust and Credit Suisse
First Boston International.*
10.7 Beneficial Interest Purchase Agreement dated as of June 26,
2001 between Lease Investment Flight Trust and Automatic
LIFT I, LP.*
21. Subsidiaries of Lease Investment Flight Trust.*
23.1 Consent of Milbank, Tweed, Hadley & McCloy LLP (included in
Exhibit 5.1).*
23.2 Consent of Morris, James, Hitchens & Williams (included in
Exhibit 5.2).*
23.3 Consent of Aircraft Information Services, Inc.*
23.4 Consent of BK Associates, Inc.*
23.5 Consent of Morton, Beyer & Agnew.*
23.6 Consent of PricewaterhouseCoopers LLP.*
23.7 Consent of Paul, Hastings, Janofsky & Walker LLP.*
23.8 Consent of Simat, Helliesen & Eichner.*
25.1 Statement of Eligibility and Qualification of Trustee on
Form T-1 of Bankers Trust Company of New York under the
Trust Indenture Act of 1939.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Letter to Clients; Form of Instructions to
Registered Holder and/or Book-Entry Transfer Facility
Participant from Lease Investment Flight Trust.*
99.4 Appraisal of Aircraft Information Services, Inc.*
99.5 Appraisal of BK Associates, Inc.*
99.6 Appraisal of Morton, Beyer & Agnew.*
</Table>
------------------------
* Filed herewith