-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HL9AvTqwS91oaBLY8cOizKtTUIaktoqUPivukG+G8BrTI+8Q29LBxTGNYu7yho7C /UDmADorg0wirhBxZKfmPw== 0000912057-96-022739.txt : 19961016 0000912057-96-022739.hdr.sgml : 19961016 ACCESSION NUMBER: 0000912057-96-022739 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19961015 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MESABA HOLDINGS INC CENTRAL INDEX KEY: 0000835768 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 411616499 STATE OF INCORPORATION: MN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-17895 FILM NUMBER: 96642962 BUSINESS ADDRESS: STREET 1: 7501 26TH AVE S CITY: MINNEAPOLIS STATE: MN ZIP: 55450 BUSINESS PHONE: 6127265151 MAIL ADDRESS: STREET 1: 7501 26TH AVE SOUTH CITY: MINNEAPOLIS STATE: MN ZIP: 55450 10-K/A 1 FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from __________ to __________ Commission File No. 0-17895 MESABA HOLDINGS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-1616499 - ---------------------------------- ---------------------------------- (State of other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 7501 26th Avenue South Minneapolis, Minnesota 55450 ---------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (612) 726-5151 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of voting stock held by nonaffiliates of the registrant as of June 20, 1996 was approximately $133,980,000. As of June 20, 1996, there were 12,760,046 shares of Common Stock of the registrant issued and outstanding. FORM 10-K/A INDEX Page ---- PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . 1 SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . 2 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) DOCUMENTS FILED WITH THIS REPORT. (3) Exhibits 10U. Term Sheet Proposal for the Acquisition of Saab 340 Aircraft by Mesaba Aviation, Inc. dated March 7, 1996 (certain portions omitted and filed separately with the Commission pursuant to a confidential treatment request.) 10V. Letter Agreement regarding Saab 340BPlus Acquisition Financing dated March 7, 1996 (certain portions omitted and filed separately with the Commission pursuant to a confidential treatment request.) 10W. Letter Agreement of April 26, 1996 relating to Airline Services Agreement between Mesaba Aviation, Inc. and Northwest Airlines, Inc. (certain portions omitted and filed separately with the Commission pursuant to a confidential treatment request.) - 1 - SIGNATURES - -------------------------------------------------------------------------------- Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: October 14, 1996 MESABA HOLDINGS, INC. By /s/ Bryan K. Bedford --------------------- Bryan K. Bedford President and Chief Executive Officer - 2 - EXHIBIT INDEX EXHIBIT NO. EXHIBIT - ----------- ------- 10U. Term Sheet Proposal for the Acquisition of Saab 340 Aircraft by Mesaba Aviation, Inc. dated March 7, 1996 (certain portions omitted and filed separately with the Commission pursuant to a confidential treatment request.) 10V. Letter Agreement regarding Saab 340BPlus Acquisition Financing dated March 7, 1996 (certain portions omitted and filed separately with the Commission pursuant to a confidential treatment request.) 10W. Letter Agreement of April 26, 1996 relating to Airline Services Agreement between Mesaba Aviation, Inc. and Northwest Airlines, Inc. (certain portions omitted and filed separately with the Commission pursuant to a confidential treatment request.) EX-10.U 2 EXHIBIT 10U TERM SHEET PROPOSAL FOR THE ACQUISITION OF SAAB 340 AIRCRAFT BY MESABA AVIATION, INC. BUYER/SUBLESSEE: Mesaba Aviation, Inc. ("Mesaba") SELLER: Saab Aircraft of America, Inc. ("SAAI") SUBLESSOR: Fairbrook Leasing, Inc. ("FLI") POTENTIAL ASSIGNEE: Northwest Aircraft Inc. ("NAI") NAI GUARANTOR: Northwest Airlines, Inc. ("NWA") FIRM AIRCRAFT: Thirty (30) new Saab 340BPLUS aircraft ("New Aircraft") and twenty (20) used Saab 340A aircraft ("340A Aircraft") OPTION AIRCRAFT: Ten (10) new Saab 340BPLUS aircraft ("Option New Aircraft"), and twelve (12) used Saab 340A aircraft ("Option 340A Aircraft") SUMMARY SAAI proposes to sell thirty (30) New Aircraft to Mesaba, in six (6) "Groups" of five (5) aircraft each. Mesaba will also acquire options for ten (10) Option New Aircraft, in two (2) Groups of five (5) aircraft each. FLI will provide, and Mesaba will utilize, sublease financing for all Groups (except that for one Group in 1997 and one Group in 1998, Mesaba may elect to purchase the Aircraft from SAAI for a fixed price, and may, at its option, then utilize debt financing to be arranged by FLI.) FLI proposes to sublease twenty (20) 340A Aircraft to Mesaba, subject to existing subleases. Mesaba will also acquire options for twelve (12) Option 340A Aircraft. Under certain circumstances, Mesaba may assign to NAI its rights to purchase, sublease or debt-finance Aircraft. NEW AIRCRAFT COMMERCIAL TERMS DOCUMENTATION: The primary agreement is the Saab 340B Aircraft Acquisition Agreement dated as of March 1, 1996 between Mesaba and SAAI (the "Acquisition Agreement"), as supplemented by ten "Exhibits" and four "Letter Agreements". SPECIFICATION: Thirty (30) New Aircraft, built to Saab 340B Type Specification 72PJS0329, Revision D dated August 1995 (Exhibit B), with the optional equipment selected by Mesaba and listed in Exhibit C, including active noise system, cold weather kit, leather seat covers, supplementary cabin cooling and heating systems, TCAS II and the Universal global positioning system ("GPS"). Until certification for factory intallation (expected before January 1, 1997) is obtained, New Aircraft will be completely provisioned for the Universal GPS, and SAAI will supply to Mesaba, at no additional cost to Mesaba, the components for Mesaba to install post-delivery. DELIVERY SCHEDULE: To be determined, based on the provisions of Annex 1. DELIVERY LOCATION: Mesaba's facility in either Minneapolis, Minnesota or Detroit, Michigan, as specified by Mesaba for any particular New Aircraft or Option New Aircraft. Mesaba shall indemnify SAAI for any state and local sales and use taxes. Mesaba shall provide positive space travel back to Sweden for three (3) crew members who deliver each Aircraft. PRICING: The purchase price for each New Aircraft is * . Mesaba will pay SAAI Advance Payments of * per New Aircraft upon the signing of this Term Sheet, and an additional * per New Aircraft upon execution and delivery of the Acquisition Agreement, for a total of * in Advance Payments per New Aircraft and an aggregate Advance Payment for New Aircraft of *. METRO III TRADE-INS: An affiliate of SAAI will assume the operating lease payment obligations for the * Metro III aircraft operated by Mesaba and identified in Letter Agreement No. 1, * . SPARE PARTS CREDITS: As more fully described in Letter Agreement No. 2, on the date the Acquisition Agreement becomes fully effective, SAAI will grant Mesaba Spare Parts Credits in the aggregate amount of * , applicable toward the purchase of aircraft and propeller spare parts from SAAI, and available for Mesaba's use as described in Letter Agreement No. 2. If Mesaba has not taken delivery of all thirty (30) New Aircraft and all twenty (20) 340A Aircraft by December 31, 1998, then SAAI will cancel Spare Parts Credits in the amount of * for each such undelivered Aircraft. - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 2 * SPARE PARTS DISCOUNT: Mesaba shall be entitled to a discount of * off the standard catalog list price for the purchase of spare parts (including propeller spare parts) from SAAI, as provided in Letter Agreement No. 2, Paragraph 2. * TRAINING: The training programs for pilots and mechanics described in Exhibit G, Section 4 will be provided for up to * of Mesaba's pilots (the initial training cadre) and up to * of Mesaba's mechanics, and SAAI will also provide Mesaba, at *, with fifteen (15) hours of simulator time (with Mesaba instructor) for each of up to * of Mesaba's pilots, all as stated in Letter Agreement No. 2, Paragraphs 5 and 6. In addition, SAAI will provide, at no additional charge, flight attendant training *, and will provide information on the Saab 340 aircraft in support of Mesaba's development of its own training materials. * - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 3 * PARTS LEASES: SAAI and Mesaba will agree on a list of insurance spare parts with a value not to exceed * (the "Lease Spares"). Subject to requirements of other Saab 340 operators from time-to-time, SAAI agrees to keep the Lease Spares on hand at its U.S. facility. During the first ten (10) years after the Delivery Date of the first 340A Aircraft to Mesaba, should Mesaba need to lease one or more of the Lease Spares to cover a temporary requirement, SAAI will provide such Lease Spares (if available) on lease at *. TECH REPS: Notwithstanding Section 2.a of Exhibit G, SAAI agrees to assign and locate one (1) Field Technical Representative each at Mesaba's Detroit and Minneapolis facilities, each for * from the commencement of Saab 340 operations at such facility. Thereafter for *, SAAI agrees to assign one (1) Field Technical Representative to Mesaba, for a total commitment of *. * OPTION NEW AIRCRAFT: As more fully described in Letter Agreement No. 4, ten (10) new Saab 340BPLUS aircraft built to the same specification as the New Aircraft, with the same optional equipment. The purchase price is * - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 4 * OPTION TERMS: Mesaba will pay SAAI * Option Fee of * to be paid upon the signing of this Term Sheet and * upon the execution and delivery of the Acquisition Agreement, for an aggregate Option Fee for Option New Aircraft of *. Mesaba must exercise its option to purchase the Option New Aircraft on or before December 31, 1998. The first Option New Aircraft will be delivered in the month that is nine (9) months after the month following Mesaba's exercise of its option, with the remaining delivery schedule to be mutually agreed, but at a rate not to exceed a total of two (2) Option New Aircraft and Option 340A Aircraft per month. Mesaba must pay SAAI an Advance Payment of * at the time it exercises its option to purchase each Option New Aircraft. NEW AIRCRAFT FINANCING OPTIONS AND TERMS DOCUMENTATION: The primary agreement is the Financing Agreement for Saab 340A and 340B Aircraft dated as of March 1, 1996 between Mesaba and FLI (the "Financing Agreement"), which is supplemented by seven Exhibits, among which are the agreed forms of lease and sublease for New Aircraft and Option New Aircraft (each referred to below, for convenience only, as a "Sublease"). The following is a summary of selected elements of the Financing Agreement that apply to New Aircraft and Option New Aircraft: COMMITMENTS OF FLI AND MESABA: FLI shall provide, and Mesaba shall utilize the Sublease financing described more fully in Section 5(a), for all Groups of New Aircraft and Option New Aircraft, unless it notifies FLI at least ninety (90) days in advance of the scheduled delivery month of the first New Aircraft or Option New Aircraft in such Group that it elects to purchase the Aircraft in that Group from SAAI as provided in the Acquisition Agreement; but (as described in Letter Agreement No. 4, Paragraph 3) Mesaba may elect to so purchase no more than one of Groups 2, 3 and 4 and no more than one of Groups 5, 6, 7 and 8. - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 5 DEBT FINANCING: If Mesaba does elect to so purchase a Group, then it may also require FLI to provide or arrange senior secured debt financing or leveraged lease debt financing for all Aircraft in such Group, as more fully described in Section 5(b). * TERM OF SUBLEASES: The term of each Sublease will be seventeen (17) years; at FLI s option such term for any Aircraft may be increased by the addition of a stub period of up to three (3) months between its delivery and the commencement of a permanent Sublease. BASIC RENT: For New Aircraft, Basic Rent will be * For Option New Aircraft, Basic Rent shall be * 340A SUBLEASE FINANCING TERMS DOCUMENTATION: The primary agreement is the Financing Agreement. The Sublease for each 340A Aircraft and Option 340A Aircraft shall be in the form of Exhibit D to the Financing Agreement, subject to changes (as provided in Section 5(a)(v)) required for conformance with the Head Lease in effect with respect to such Aircraft. The following is a summary of selected elements of the Financing Agreement that apply to 340A Aircraft and Option 340A Aircraft: COMMITMENTS OF FLI AND MESABA: As more fully described in Sections 3(a) and 4, FLI shall deliver to Mesaba, and Mesaba shall sublease from FLI, twenty (20) 340A Aircraft, and Mesaba will pay FLI, upon the signing of this Term Sheet, * , for a total of * , in Advance Payments. SPECIFICATION: As more fully described in Annex 2 hereto (which supersedes Exhibit C to the draft - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 6 Financing Agreement), the 340A Aircraft will be configured with 34 seats, forward galley and aft lavatory, with cold weather kit, leather seat covers, TCAS II and supplementary cabin heating system. (Section 3(d)). * DELIVERY SCHEDULE: To be determined, based on the provisions of Annex 1. DELIVERY LOCATION: At the facility where each Aircraft has been refurbished or another, mutually agreed location so as to minimize the tax impact of such delivery. Mesaba shall indemnify FLI for any state and local sales or use taxes. Mesaba's pilots shall ferry each Aircraft from the refurbishment facility to the delivery location and then to Mesaba's operations base, but FLI will assist Mesaba by providing pilots for as many as the first three (3) deliveries, until Mesaba has trained sufficient pilots on the Saab 340 to reasonably accommodate such delivery flights. TERM OF SUBLEASES: At FLI's option, and depending on the remaining term of the applicable Head Lease, the term of each Sublease will be between 72 and 96 months (Section 5(a)(ii)), * BASIC RENT: * OPTION 340A AIRCRAFT: As many as twelve (12) Option 340A Aircraft, offered in an initial set of five (5) aircraft ("Group A") and a second set of seven (7) aircraft ("Group B"). The Option 340A Aircraft will have the same specification, Sublease term and Basic Rent as the 340A Aircraft. The earliest delivery date for the first Option 340A Aircraft will be in the month after the scheduled delivery month of the 30th New Aircraft (and no sooner than * after the month in which the option was exercised), with remaining delivery schedule to be mutually agreed, but at a rate not to exceed two (2) Option New Aircraft and Option 340A Aircraft per month, subject, only in the case of Group B Option 340A Aircraft, to such aircraft being "Available" as defined in Section 3(a) of the Financing Agreement. - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 7 The option to sublease either Group must be exercised no later than December 31, 1998. The option to sublease Group B cannot be exercised unless Mesaba has also exercised its option to acquire all of the Option New Aircraft. RIGHTS ASSIGNABLE TO NORTHWEST AIRCRAFT AND NORTHWEST AIRLINES PURCHASE RIGHTS: Mesaba shall have the right to assign to NAI its right to purchase New Aircraft and Option New Aircraft under the Acquisition Agreement (as limited by the provisions of Letter Agreement No. 3, Paragraph 1). NEW AIRCRAFT SUBLEASE FINANCING: As more fully described in Section 5(a)(vi) of the Financing Agreement, on ninety (90) days notice as provided in Section 5(c), Mesaba may assign to NAI its right to take delivery of any Group of Aircraft under Sublease financing, if NWA fully guarantees NAI's obligations and NAI assumes all of Mesaba's obligations, * REVERSE ASSIGNMENT RIGHT: NAI shall have the one-time right under each Sublease of a New Aircraft or Option New Aircraft to assign such Sublease to Mesaba, if Mesaba assumes all of NAI's obligations. * NEW AIRCRAFT DEBT FINANCING: As more fully described in Section 5(b)(iv), on ninety (90) days notice (as provided in Section 5(c)), Mesaba may assign to NAI its right to take delivery of any Group subject to a debt financing described in Section 5(b), if NWA fully guarantees NAI's obligations and NAI assumes all of Mesaba's obligations. 340A SUBLEASE FINANCING: As more fully described in Section 5(a)(vii), Mesaba may assign all of its 340A Aircraft Subleases and the right to acquire as yet undelivered 340A Aircraft to NWA in the event the Airline Services Agreement between Mesaba and NWA is not renewed before March 31, 1997, if NWA assumes all of Mesaba's obligations. - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 8 TERMS APPLICABLE TO ALL FINANCINGS * SUBORDINATION: As more fully described in Section 5(a)(iv) of the Financing Agreement, any sublease from FLI to Mesaba, NA or NWA shall be subject and subordinate to any applicable Head Lease. MODIFICATIONS: As more fully described in Section 5(a)(v), Mesaba will cooperate with FLI in structuring a lease-in-lease-out transaction for New Aircraft or Option New Aircraft and in modifying the form of Sublease (Exhibit D to the Financing Agreement) for 340A Aircraft and Option 340A Aircraft so the Sublease will not conflict with the Head Lease in effect with respect to such Aircraft. ADMINISTRATIVE QUIET ENJOYMENT: As provided in Section 4(b) of the form of Sublease (Financing Agreement Exhibit D). HEAD LEASE PASSTHROUGH: As described in Section 24 of the form of Sublease (Exhibit D to the Financing Agreement), FLI will pass through to Mesaba such EBO * and renewal rights as it negotiates with the Head Lessor. FLI also agrees to pass through to Mesaba the return conditions it negotiates with the Head Lessor *; FLI will endeavor to obtain provisions in the Head Lease to the effect that major conponents that are covered by "power-by the-hour" agreements automatically satisfy return conditions for such components if such agreements are current and in good standing, subject to the agreement of each affected vendor. SPARE PARTS LIEN: As more fully provided in Section 5(f), Mesaba shall grant FLI a first priority security interest in all spare parts for Saab aircraft provided hereunder or acquired through application of Spare Parts Credits, to secure Mesaba's obligations under all financings through 2005. - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 9 CONDITIONS PRECEDENT AND EFFECT OF THIS TERM SHEET DOCUMENTATION: 1. The Acquisition Agreement 2. Letter Agreements Nos. 1 through 4 3. The Financing Agreement 4. Letter Agreement Dated March 7, 1996 between Saab Aircraft AB and Mesaba. CONDITIONS PRECEDENT: None of the above-listed agreements shall be effective unless and until (1) all such agreements have been signed by each party thereto and delivered to all respective counterparties, (2) SAAI shall have received the Advance Payments * for the New Aircraft and the Option Fee * for the Option New Aircraft, (3) FLI shall have received the Advance Payments * for the 340A Aircraft and the Option Fee * for the Option 340A Aircraft and (4) NWA shall have approved the transactions contemplated by such final documentation. In the event that one or more of these conditions precedent shall not have been either satisfied or waived by the party to receive such signed document or payment, then all payments shall be immediately refundable to Mesaba. EFFECT OF THIS TERM SHEET: By signing this Term Sheet, SAAI, FLI and Mesaba evidence their agreement to negotiate, execute and deliver definitive documentation in substantially the form and substance of the 2/18/96 drafts of the above-listed documents no later than April 15, 1996; provided, however, that in the event of any conflict between the terms set forth in this Term Sheet and any such draft, the terms set forth in this Term Sheet shall prevail. VALIDITY AND LAW: This Term Sheet is to be governed in all respects by the laws of the State of New York, including all matters of construction, validity and performance. It shall not be effective unless and until (1) it has been signed by and delivered to each other party, (2) SAAI shall have received * Advance Payments for the New Aircraft * the Option Fee for the New Aircraft * , (3) FLI shall have received the Advance Payments * for the 340A Aircraft * Option Fee for the Option 340A Aircraft, all on or before March 7, 1996. It shall be null and void if on or before March 7, 1996, (1) either FLI or SAAI notifies Mesaba in writing that the Board of Directors of Saab Aircraft AB has - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 10 failed to approve the transactions contemplated hereby or (2) Mesaba notifies both SAAI and FLI that its Board of Directors has failed to approve the transactions contemplated hereby. PUBLICITY: All of the information and content of this Term Sheet (specifically including, without limitation, Basic Rent provisions) shall remain confidential until all three parties agree otherwise. SAAI and FLI acknowledge the importance of confidentiality in light of the status of Mesaba's parent company, Mesaba Holdings, Inc., as a publicly-traded company. Mesaba recognizes the difficulty of such information remaining secret, and agrees to authorize a press release as soon as possible after its Board approval of the transaction is obtained. Mesaba agrees to permit SAAI and FLI to review and comment in advance any proposed public disclosures involving information about the transactions contemplated by this Term Sheet and the Documents listed above. Signed on March 7, 1996. Mesaba Aviation, Fairbrook Leasing, Saab Aircraft of Inc. Inc. America, Inc. By: /s/ Bryan K. Bedford By: /s/ Henrik Schroder By: /s/ Mark D. Pugliese -------------------- ------------------- -------------------- Bryan K. Bedford Henrik Schroder Mark D. Pugliese President and CEO President and CEO Executive Vice President and General Counsel By: /s/ Gena H. Laurent By: /s/ Steven M. Wallace ------------------- --------------------- Gena H. Laurent Steven M. Wallace Assistant Vice Vice President - President Product Support 11 ANNEX 1 DETERMINATION OF DELIVERY SCHEDULE FOR NEW AIRCRAFT AND 340A AIRCRAFT The thirty (30) New Aircraft and twenty (20) 340A Aircraft shall be delivered commencing May 1996 and continuing through May 1998. Subject to the following constraints, SAAI shall determine the mix of New Aircraft and 340A Aircraft for each calendar quarter at least three (3) months in advance of each quarter: 1. Two Aircraft will be delivered each month. 2. No more than five (5) New Aircraft will be delivered in 1996. 3. No New Aircraft will be delivered before September 1996. 4. No New Aircraft will be delivered in any July. 5. By the end of 1997, at least seventeen (17) New Aircraft will be delivered. 6. SAAI and Mesaba will cooperate with each other, particularly during the early part of the delivery cycle, in establishing delivery dates and accommodating each other's reasonable requests for flexibility. ANNEX 2 SAAB 340A CONFIGURATION Interior Panel Refurbishment New Carpeting Leather Seat Covers New Exterior Paint Interchangeability of Propellers WEU to Mod. 5 EFIS Fan SB ACT Inlet Connectors Lucas Brushes for Generators C-Check and Structural Inspections Cold Weather Kit Supplementary Heating TCAS II 34 Passenger Seats Forward Galley Aft Lavatory EX-10.V 3 EXHIBIT 10V EXHIBIT 10V [LETTERHEAD] March 7, 1996 Mesaba Aviation, Inc. 7501 26th Avenue South Minneapolis, MN 55450 Attention: Bryan K. Bedford President and CEO Copy: Northwest Airlines, Inc. 5101 Northwest Drive Department A4010 St. Paul, MN 55111-3034 Attention: Joseph E. Francht Senior Vice President & Treasurer Copy: Northwest Aircraft, Inc. 5101 Northwest Drive Department A5000 St. Paul, MN 55111-3034 Attention: Daniel B. Matthews Vice President Re: Saab 340BPLUS Acquisition Financing ----------------------------------- Gentlemen: Saab Aircraft Finance Corporation ("SAFC") proposes to sublease thirty (30) new Saab 340BPLUS aircraft ("Aircraft") for initial delivery to Mesaba Aviation, Inc., a Northwest Airlink company, on the following basis: AIRCRAFT GROUPINGS The Aircraft will be grouped into six (6) separate groups containing five (5) Aircraft (each a "Group"), with all Aircraft in the first Group to be delivered before December 31, 1996. The remaining Groups shall contain on the average 1.5 aircraft deliveries per month, excluding July. AIRCRAFT SUBLEASE Subject to Mesaba's not exercising any of the below stated options ninety (90) days prior to the scheduled delivery month of the first Aircraft in each Group (such options being available only for a maximum of one Group in 1997 and one Group in 1998, however), concurrent with the delivery of each Aircraft for which Mesaba has not exercised any of the options within each Group, SAFC (or an affiliate thereof) will enter into a sublease agreement ("sublease") with either Mesaba Aviation, Inc. ("Mesaba") or Northwest Aircraft, Inc. ("Northwest Aircraft"), (either referred to as "Sublessee") such determination to be made by Mesaba and approved by Northwest Airlines, Inc. ("NWA") by prior written notice to be given to SAFC no later than 60 days prior to the commencement of each sublease. If no determination has been received prior to the sixty (60) day period, then the sublessee shall be construed to be Mesaba. * At any time during the sublease, Northwest Aircraft shall have (in addition to any rights to sub-sublease the Aircraft as provided in the form of Sublease) a one-time option to assign its position as sublessee to Mesaba, * Subleases to either Sublessee shall contain terms and conditions typically available to NWA in the marketplace for U.S. leveraged leases as discussed with Capstar Partners. SAFC shall have the right to lease Aircraft directly to either Mesaba or Northwest Aircraft, as the case may be for an interim period of up to three (3) months, after which the 17-year sublease term shall commence. Each sublease shall be subject and subordinate to the head lease arranged by SAFC * GROUP DEBT FINANCING OPTIONS As an alternative to the Sublease, at Mesaba's sole option (to be approved by NWA), subject to Mesaba having exercised such option * prior to the scheduled delivery month of the first Aircraft in each Group, SAFC shall arrange one of the below specified debt financing structures by either having an SAFC affiliate provide the debt financing or arrange to have a third party provide the debt financing. In either case, the terms and conditions of such debt financing shall be of generally acceptable market terms and conditions at the time of the funding for transactions of similar kind and nature, and the documentation for such financings shall contain terms and conditions typically available to NWA in the U.S. marketplace for similar financings as discussed with Capstar Partners. 1. Senior secured debt financing for the purchase by Mesaba or Northwest Aircraft of the Aircraft in an amount not to exceed * , for a maximum 10 year term, with semi-annual payments in arrears, with equal amortization per payment period, with no balloon at the end of term. If the debt is extended to Mesaba the interest - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 2 rate on the purchase debt for each Aircraft, for which the option has been exercised within such Group, shall be fixed at the 5.5-year U.S. Treasury Note yield plus *, at the time of the Aircraft delivery, and a guarantee fee paid to SAFC equal to * . If the debt is extended to Northwest Aircraft, Inc. with a payment and performance guaranty from NWA, the interest rate on the purchase debt for each Aircraft, for which the option has been exercised within such Group, shall be fixed at the 5.5-year U.S. Treasury Note yield plus a fixed percentage p.a. available in the market, based solely on the credit worthiness of the Northwest Airlines, Inc. credit and a senior secured collateral position in the Aircraft * ; PROVIDED, however that such interest rate shall in no event exceed the interest rate available to Mesaba hereunder, or 2. Senior secured non-recourse debt financing into a third party leveraged lease in an amount not to exceed * , for a maximum 17 year term, with semi- annual payments in arrears, with no balloon at the end. If the debt is extended to a lessor for a lease to Mesaba the interest rate on the debt for each Aircraft, for which the option has been exercised within such Group, shall be fixed at the 10-year U.S. Treasury Note yield plus 2.00% p.a., at the time of the Aircraft delivery, and a guarantee fee paid to SAFC equal * . If the debt is extended to a lessor for a lease to Northwest Aircraft, with a payment and performance guaranty from NWA, the interest rate on the debt for each Aircraft for which the option has been exercised within such group, shall be * , based solely on the credit worthiness of the NWA credit and a senior secured collateral position in the Aircraft, * ; PROVIDED, however that such interest rate shall in no event exceed the interest rate available to Mesaba hereunder. PURCHASE OPTION Subject to Mesaba's having exercised the option at least ninety (90) days prior to the scheduled delivery month of the first Aircraft in each Group, to the extent that Mesaba or Northwest Aircraft have not exercised an option to use the Sublease or any of the Debt Financing Options, SAFC will cause SAAI to sell the Aircraft to either Mesaba or Northwest Aircraft, as determined in the written option notice, for a purchase price of * due upon delivery of each Aircraft. In addition to other commitments made to Mesaba including, without limitation, the lease or sublease of used Saab 340A aircraft, which SAFC shall also make available to NWA on the same terms and conditions, such determination to be agreed upon between Mesaba and NWA, this letter sets forth SAFC's commitment with respect to thirty (30) new Saab 340B Aircraft and the general understanding as to the sublease financing, debt financing and purchase options available to Mesaba or NWA. It is understood between the parties that any commitment on the part of NWA, Northwest Aircraft, Mesaba or SAFC is subject to Finance Committee and board approval of NWA, board approval of Mesaba, credit committee approval of SAFC by no later than March 7, 1996 as well as negotiation and execution of definitive aircraft purchase, financing and lease documentation to be executed by no later than April 15, 1996. Notwithstanding anything to the contrary set forth herein, no commitment contained herein shall be binding on NWA, Northwest - --------------- * Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. 3 Aircraft or Mesaba until approval of this specific transaction has been obtained from NWA following the date hereof. If acceptable to Mesaba, NWA and Northwest Aircraft, please evidence agreement or acknowledgment by signing below and returning an originally executed copy, otherwise this offer will expire on March 8, 1996. Saab Aircraft Finance Corporation By: /s/ Henrik Schroder ---------------------------- Henrik Schroder President By: /s/ Gena H. Laurent ---------------------------- Gena H. Laurent Assistant Vice President Agreed to and Accepted by: Mesaba Aviation, Inc. By: /s/ Bryan K. Bedford ---------------------------- Bryan K. Bedforid President and CEO Acknowledged by: Northwest Airlines, Inc. By: /s/ Joseph E. Francht, Jr. ---------------------------- Name: Joseph E. Francht, Jr. Title: Senior Vice President Finance and Treasurer Acknowledged by: Northwest Aircraft, Inc. By: /s/ Daniel B. Matthews ---------------------------- Name: Daniel B. Matthews Title: Vice President 4 EX-10.W 4 EXHIBIT 10W April 18, 1996 Mr. Bryan K. Bedford President and CEO Mesaba Airlines 7501 26th Avenue South Minneapolis, MN Dear Bryan: This Side Letter to the Airline Services Agreement ("Agreement") dated September 15, 1988, as amended, between Mesaba Aviation, Inc. and Northwest Airlines, Inc., sets forth the revised compensation methodology to be utilized during the period January 1, 1996 through March 31, 1997 ("Interim Period"). Except as is expressly discussed below, all other terms and conditions of the Agreement shall remain unchanged. COST PER ASM TARGET LEVELS Mesaba agrees to achieve systemwide Cost per ASM levels consistent with the following schedule: CALENDAR QUARTER - -------------------------------------------------------------------------------- 1Q96 2Q96 3Q96 4Q96 1Q97 --------- --------- --------- --------- --------- Cost per ASM * * * * * Northwest shall not be obligated to make any ASM payments in excess of the Cost per ASM levels set forth above ("ASM Cap Rate"). * It is understood by Mesaba and Northwest that the ASM Cap Rate includes * of additional annual Dash 8 expenses (Exhibit A) transferred to Mesaba, which were previously paid for directly by Northwest, and Mesaba hereby agrees that it is responsible for payment of such costs. * REDUCED COST SHARING To the extent that Mesaba is able to cut costs to a level below the quarterly ASM Cap Rate, Northwest and Mesaba shall share such savings equally until the actual system Cost per ASM reaches * , below which Mesaba shall retain all savings. The calculation of actual cost per ASM versus the ASM Cap Rate shall be reconciled quarterly, and shall be settled on the first wire transfer date after such reconciliation. *Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. PER PASSENGER FEES Mesaba shall receive * per passenger for all revenue passengers which fly on Mesaba flights. A passenger flying on a one-stop flight into the hub city shall be treated as a single passenger for calculating the per passenger fees (i.e. this passenger does not get counted for each segment). PERFORMANCE BONUSES The Performance Bonus calculations shall be based upon a controllable completion factor goal of * and a controllable on-time performance goal of * (arrival within * minutes). Mesaba shall receive a bonus of * per passenger, for all passengers if the goals are achieved. Mesaba shall pay penalties in accordance with Section JP-4.5.C of the Agreement for completion factor and on-time shortfalls. Sections JP-4.5.A (Northwest Contribution Margin Bonus) and JP-4.5.B (Cost per ASM target range) of the Agreement shall no longer apply. FUEL ADJUSTMENT Effective January 1, 1996 and throughout the term of this agreement, Mesaba shall submit to Northwest a monthly reconciliation of its cost per gallon of into-plane aircraft fuel. Northwest shall reimburse Mesaba for all into-plane fuel costs incurred by Mesaba in excess of * and Mesaba will reimburse Northwest (through a set-off from revenue wire transfers to Mesaba) for all into-plane fuel costs of less than * based on actual monthly usage. Mesaba agrees to pay Northwest a fee of * /month for services related to fuel administration provided by Northwest during the term of this agreement. * * SCHEDULING Northwest agrees to use all commercially reasonable efforts to identify and implement Mesaba growth opportunities in 1996. Northwest also agrees to a conduct a quarterly schedule coordination meeting. Except as expressly set forth herein, the Agreement shall remain in full force and effect. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Agreement. This Side Letter shall in all respects be subject to the terms and conditions of the Agreement except that in the event of an inconsistency between the Agreement and this Side Letter, the terms and conditions of this Side Letter shall prevail. Accepted and Agreed to this 26 day of April 1996. *Confidential portions omitted and filed separately with the Commission pursuant to a confidential treatment request. /s/Neal Cohen /s/Bryan K. Bedford - ------------------------------ ------------------------------ Neal Cohen Bryan K. Bedford Vice President President and CEO Northwest Airlines, Inc. Mesaba Airlines, Inc. -----END PRIVACY-ENHANCED MESSAGE-----