<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 25, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
NORTHWEST AIRLINES CORPORATION NORTHWEST AIRLINES, INC.
(Exact name of Registrants as specified in their charters)
DELAWARE MINNESOTA
(State or other jurisdiction of incorporation or organization)
4512 4512
(Primary Standard Industrial Classification Code Number)
41-1905580 41-0449230
(I.R.S. Employer Identification Number)
</TABLE>
------------------------
2700 LONE OAK PARKWAY
EAGAN, MINNESOTA 55121
(612) 726-2111
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
------------------------------
DOUGLAS M. STEENLAND, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
NORTHWEST AIRLINES CORPORATION
2700 LONE OAK PARKWAY
EAGAN, MINNESOTA 55121
(612) 726-2111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPY TO:
STEPHAN J. FEDER, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3954
(212) 455-2000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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(c)
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
Pursuant to Rule 429 of the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act of 1933, the Forms of Prospectus
included in this Registration Statement also relate to an aggregate remaining
amount of $478,800,000 of the classes of Securities covered by such Forms of
Prospectus previously registered under the Registration Statement on Form S-3
(File No. 333-41579-01). A filing fee of $352,764 was paid on December 5, 1997
in connection with the remaining amount of Securities registered under the
Registration Statement on Form S-3 (File No. 333-41579-01). This Registration
Statement is a new Registration Statement, constitutes Post Effective Amendment
No. 2 to Registration Statement No. 333-41579-01, and such Post-Effective
Amendment shall hereafter become effective concurrently with the effectiveness
of this Registration Statement and in accordance with Section 8(c) of the
Securities Act of 1933.
(CONTINUED ON FOLLOWING PAGE)
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<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED OFFERING PRICE (1) REGISTRATION FEE
<S> <C> <C>
Guarantees of Northwest Airlines Corporation (2)..................................
Debt Securities of Northwest Airlines, Inc. (3)................................... $1,021,200,000 $283,893.60
Warrants to Purchase Debt Securities of Northwest Airlines, Inc. (4)..............
Pass Through Certificates of Northwest Airlines, Inc. (3).........................
</TABLE>
(1) In United States dollars or the equivalent thereof in foreign currency or
currency units. Estimated solely for purposes of calculating the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
(2) To be issued in connection with Debt Securities and Pass Through
Certificates of Northwest Airlines, Inc.
(3) If any of these securities are issued at an original issue discount, the
principal amount at maturity will be higher than the aggregate proceeds
received.
(4) Warrants to purchase Debt Securities of Northwest Airlines, Inc. may be
offered and sold separately or together with the Debt Securities of
Northwest Airlines, Inc.
<PAGE>
EXPLANATORY NOTE
This Registration Statement consists of two separate Prospectuses, covering
securities to be registered as follows:
(1) Debt Securities and Warrants to Purchase Debt Securities of
Northwest Airlines, Inc. and Guarantees of the Debt Securities by Northwest
Airlines Corporation; and
(2) Pass Through Certificates of Northwest Airlines, Inc. and related
Guarantees of Northwest Airlines Corporation.
Separate financial statements of Northwest Airlines, Inc. are not being
provided because all of the securities being issued by Northwest Airlines, Inc.
under this Registration Statement are fully and unconditionally guaranteed by
Northwest Airlines Corporation and such separate financial statements are
therefore not deemed material.
<PAGE>
SUBJECT TO COMPLETION, DATED , 1999
PROSPECTUS
$1,500,000,000
NORTHWEST AIRLINES, INC.
DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES
------------------
Payment of Principal, Premium, if any, and Interest Fully and Unconditionally
Guaranteed by
NORTHWEST AIRLINES CORPORATION
---------------
Northwest Airlines, Inc. may from time to time offer its debt securities and
warrants to purchase debt securities. The debt securities will be fully and
unconditionally guaranteed by Northwest Airlines Corporation, the indirect
parent of Northwest Airlines, Inc.
When we decide to sell a particular series of securities, we will provide
specific terms of the offered securities in a prospectus supplement. You should
read this prospectus and any prospectus supplement carefully before you invest.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
------------------------
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
About this Prospectus...................................................................................... 2
Incorporation of Certain Documents by Reference............................................................ 3
Disclosure Regarding Forward-looking Statements............................................................ 3
The Company................................................................................................ 4
Use of Proceeds............................................................................................ 4
Ratio of Earnings to Fixed Charges......................................................................... 4
Description of Debt Securities............................................................................. 5
Description of Warrants.................................................................................... 18
Plan of Distribution....................................................................................... 20
Legal Opinions............................................................................................. 21
Experts.................................................................................................... 21
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED IN THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT, INCLUDING THE INFORMATION INCORPORATED BY REFERENCE. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. NORTHWEST
AIRLINES, INC. WILL OFFER TO SELL THE SECURITIES AND SEEK OFFERS TO BUY THE
SECURITIES, ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF
DELIVERY OF THIS PROSPECTUS OR OF ANY SALES OF THE SECURITIES.
ABOUT THIS PROSPECTUS
This prospectus is part of registration statements that we filed with the
Securities and Exchange utilizing a "shelf" registration process. Under this
shelf process, we may sell any combination of debt securities and warrants to
purchase debt securities described in this prospectus in one or more offerings
up to a total dollar amount of $1,500,000,000 or the equivalent of this amount
in foreign currencies or foreign currency units.
This prospectus provides you with a general description of the securities we
may offer. Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
offered securities. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
below under "Incorporation of Certain Documents by Reference."
This prospectus does not contain all of the information in the registration
statements. Statements we make in this prospectus about the contents of any
contract, agreement or other document are not necessarily complete. If that
contract, agreement or other document has been filed as an exhibit to the
registration statements, we refer you to the exhibit for a more complete
description. The information in this prospectus is accurate only as of the date
of this prospectus, regardless of the time of delivery of this prospectus or any
sale of the securities.
In this prospectus, "Northwest" refers to Northwest Airlines, Inc., "NWA
Corp." to Northwest Airlines Corporation and the "Company," "we," "us" or "our"
to NWA Corp. and its consolidated subsidiaries.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
NWA Corp. files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
over the internet at the SEC's web site at http://www.sec.gov. Northwest is not
required to file separate reports, proxy and information statements or other
information with the SEC pursuant to the Securities Exchange Act of 1934.
Instead, we have provided information with respect to Northwest, to the extent
required, in filings made by NWA Corp.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we complete our offering of the securities:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999; and
- Current Reports on Form 8-K filed on January 22, 1999, February 24, 1999
and April 19, 1999.
You may request a copy of these filings (other than exhibits to them) at no
cost, by writing or telephoning us at the following address:
Secretary's Office
Northwest Airlines Corporation
5101 Northwest Drive, Dept. A1180
St. Paul, Minnesota 55111-3034
Telephone: (612) 726-2111
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are subject to a number
of risks and uncertainties, all of which are difficult to predict and many of
which are beyond the Company's control. Forward-looking statements are typically
identified by the words "may," "will," "believe," "expect," "anticipate,"
"intend," "estimate" and similar expressions. Actual results could differ
materially from those contemplated by these forward-looking statements as a
result of a number of factors. It is not reasonably possible to itemize all of
the many factors and specific events that could affect the outlook of an airline
operating in the global economy. Some factors that could significantly impact
expected capacity, load factors, revenues, expenses and cash flows include the
airline pricing environment, fuel costs, labor negotiations both at the Company
and other carriers, low-fare carrier expansion, capacity decisions of other
carriers, actions of the U.S. and foreign governments, foreign currency exchange
rate fluctuation, inflation, the general economic environment in the U.S. and
other regions of the world and other factors discussed herein.
In light of these risks and uncertainties, there can be no assurance that
the results and events contemplated by the forward-looking statements contained
in this prospectus will in fact be realize. Potential investors are cautioned
not to place undue reliance on these forward-looking statements. The Company
does not undertake any obligation to update or revise any forward-looking
statements. All subsequent written or oral forward-looking statements
attributable to the Company or persons acting on behalf of the Company are
expressly qualified in their entirety by the factors described above.
3
<PAGE>
THE COMPANY
Northwest, the principal wholly-owned indirect subsidiary of NWA Corp.,
operates the world's fourth largest airline (as measured by 1997 revenue
passenger miles ("RPMs")) and engages principally in commercial transportation
of passengers and cargo. Northwest's business focuses on the development of a
global airline network through its strategic assets that include:
- domestic hubs at Detroit, Minneapolis/St. Paul and Memphis;
- an extensive Pacific route system with hubs at Tokyo and Osaka;
- a transatlantic alliance with KLM Royal Dutch Airlines which operates
through a hub in Amsterdam and, subject to regulatory approvals, with
Alitalia which operates through hubs in Rome and Milan; and
- a global alliance with Continental Airlines, Inc.
Northwest operates substantial domestic and international route networks and
directly serves more than 150 cities in 21 countries in North America, Asia and
Europe. Northwest had more than 50.5 million enplanements and flew over 66.7
billion RPMs in 1998. Northwest began operations in 1926.
On November 20, 1998, NWA Corp. effected a holding company reorganization.
As a result, Northwest Airlines Holdings Corporation (formerly known as
Northwest Airlines Corporation and, prior to the reorganization, the publicly
traded holding company, "Old NWA Corp.") became a direct wholly-owned subsidiary
of NWA Corp. NWA Corp. is now the publicly traded holding company, which owns
directly Old NWA Corp. and indirectly the holding and operating subsidiaries of
Old NWA Corp. References in this prospectus to NWA Corp. for time periods prior
to November 20, 1998 refer to Old NWA Corp.
Our principal executive offices are located at 2700 Lone Oak Parkway, Eagan,
Minnesota 55121; our mailing address is 5101 Northwest Drive, St. Paul,
Minnesota 55111-3034 and our telephone number is (612) 726-2111.
USE OF PROCEEDS
Unless the applicable prospectus supplement indicates otherwise, net
proceeds from the sale of the offered securities will be added to Northwest's
working capital. We will use the proceeds for general corporate purposes,
including the repayment of outstanding indebtedness and financing of capital
expenditures. We do not currently expect to discharge any indebtedness or
finance any capital expenditures with the proceeds of the sale of the offered
securities.
RATIO OF EARNINGS TO FIXED CHARGES
We have set forth below the ratio of earnings to fixed charges for NWA Corp.
and its consolidated subsidiaries for the periods indicated. The ratio of
earnings to fixed charges represents the number of times that fixed charges were
covered by earnings. In computing the ratio, earnings represent consolidated
earnings (loss) before income taxes, cumulative effect of accounting change and
fixed charges (excluding capitalized interest). Fixed charges consist of
interest expense (including capitalized interest), one-third of rental expense,
which is considered representative of the interest factor, and amortization of
debt discount and expense.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
- ------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998 1998 1999
- --------- --------- --------- --------- ----- --------- -----
1.88..... 1.90 2.74 3.05 (a) 2.01 (b)
</TABLE>
- ------------------------
(a) Earnings were inadequate to cover fixed charges by $452 million for the year
ended December 31, 1998.
(b) Earnings were inadequate to cover fixed charges by $69 million for three
months ended March 31, 1999.
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The debt securities offered pursuant to this prospectus ("Debt Securities")
may be issued as unsecured and unsubordinated debt securities ("Senior Debt
Securities") or as unsecured and subordinated debt securities ("Senior
Subordinated Debt Securities"). The following description of the terms of the
Debt Securities summarizes certain general terms and provisions of the Debt
Securities to which any prospectus supplement may relate. The applicable
prospects supplement will describe the particular terms and provisions of the
Debt Securities offered by that prospectus supplement and the application of
these general terms and provisions to them.
The Senior Debt Securities will be issued under an Indenture among
Northwest, as issuer, NWA Corp., as guarantor, Old NWA Corp. and State Street
Bank and Trust Company, as trustee (the "Trustee") (the "Senior Indenture"). The
Senior Subordinated Debt Securities are to be issued under an Indenture among
Northwest, as issuer, NWA Corp., as guarantor, and the Trustee (the
"Subordinated Indenture"). We refer to the Senior Indenture and the Subordinated
Indenture each as an "Indenture" and together as the "Indentures." A copy of the
form of each Indenture is filed as an exhibit to the registration statement of
which this prospectus is a part.
Northwest may offer a series of Debt Securities at the same time that it
makes an offer of warrants ("Warrants") to purchase an additional portion of the
same or another series of Debt Securities. Northwest also may offer Warrants to
purchase a series of Debt Securities independently of any offering of Debt
Securities. See "Description of Warrants."
The statements in this prospectus relating to the Debt Securities and the
Indentures are summaries. You should refer to the Indentures for the complete
terms of the Debt Securities and the Indentures, including the definitions of
certain capitalized terms in this prospectus. Where we make no distinction
between the Senior Debt Securities and the Senior Subordinated Debt Securities
or between the Senior Indenture and the Subordinated Indenture, those summaries
refer to any Debt Securities and either Indenture. Whenever we refer to
particular defined terms of the Indentures in this prospectus or in a prospectus
supplement, those defined terms are incorporated by reference in this prospectus
or in that prospectus supplement.
The applicable prospectus supplement will set forth the anticipated market
for the Debt Securities and the specific use of proceeds of an offering of them.
TO THE EXTENT THAT ANY PROVISION IN ANY PROSPECTUS SUPPLEMENT IS
INCONSISTENT WITH ANY PROVISION IN THIS SUMMARY, THE PROVISION OF THE PROSPECTUS
SUPPLEMENT WILL CONTROL.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued under those Indentures. Northwest may issue from
time to time Debt Securities in one or more series under those Indentures. The
Senior Debt Securities will be unsecured and unsubordinated obligations of
Northwest and will rank equally with all other unsecured and unsubordinated
indebtedness of Northwest. The Senior Subordinated Debt Securities will be
unsecured obligations of Northwest and, as set forth below under "Subordination
of Senior Subordinated Debt Securities," will be subordinated in right of
payment to all Senior Indebtedness of Northwest.
You should refer to the prospectus supplement which accompanies this
prospectus for a description of the specific series of Debt Securities that
Northwest is offering by that prospectus supplement or, if Northwest is offering
Warrants, the Debt Securities that it will issue upon exercise of those
Warrants. These terms may include:
(1) the specific designation of the Debt Securities, including whether
they are Senior Debt Securities or Senior Subordinated Debt Securities;
5
<PAGE>
(2) any limit upon the aggregate principal amount of the Debt
Securities;
(3) the maturity date or dates of the principal of the Debt Securities
or the method of determining the maturity date or dates;
(4) the rate or rates (which may be fixed or variable) at which the Debt
Securities will bear interest, if there is any interest, or the method of
calculating the interest rate or rates;
(5) the date or dates on which interest, if any, will accrue or the
method of determining that date or dates;
(6) the date or dates on which interest, if any, will be payable and the
record date or dates for the interest payment date or dates;
(7) the place or places where principal of or, premium, if any, and
interest, if any, on the Debt Securities will be payable;
(8) if Northwest may redeem, at its option, the Debt Securities in whole
or in part, (A) the period or periods, (B) the price or prices, (C) the
currency or currencies (including currency units) and (D) the terms and
conditions for the optional redemption or redemptions;
(9) if Northwest is obligated to redeem or purchase the Debt Securities
in whole or in part, pursuant to any sinking fund or similar provisions,
upon the happening of specified events or at the option of a holder of the
Debt Securities, (A) the period or periods, (B) the price or prices and (C)
the terms and conditions for the mandatory redemption or redemptions;
(10) the denominations of the Debt Securities that Northwest is
authorized to issue;
(11) regarding the currency or currency units,
- the currency or currency units for which the Debt Securities may be
purchased or in which the Debt Securities may be denominated, and/or
- the currency or currency units in which principal of, premium, if
any, and /or interest, if any, on the Debt Securities will be payable or
redeemable, and
- whether Northwest or the holders of any Debt Securities may elect
to pay or receive payments in a currency or currency units other than the
currency in which the Debt Securities are stated to be payable or
redeemable;
(12) if other than the principal amount, the portion of the principal
amount of the Debt Securities which will be payable upon declaration of the
acceleration of the maturity, or the method by which that portion will be
determined;
(13) the person to whom any interest on any Debt Security will be
payable, if other than the person in whose name that Debt Security is
registered on the applicable record date;
(14) any addition to, or modification or deletion of, any Event of
Default or any covenant of Northwest or NWA Corp. specified in the Indenture
with respect to the Debt Securities;
(15) the application, if any, of the means of defeasance or covenant
defeasance specified for the Debt Securities and coupons, if any;
(16) whether the Debt Securities are to be issued in whole or in part in
the form of one or more temporary or permanent global securities and, if so,
the identity of the depositary for such global security or securities;
(17) the terms and conditions relating to Warrants issued by Northwest,
if any, in connection with or for the purchase of the Debt Securities;
6
<PAGE>
(18) any index used to determine the amount of payments of principal of,
and premium, if any, and interest, if any, on the Debt Securities;
(19) any provisions relating to the exchange of the Debt Securities; and
(20) any other special terms of the Debt Securities.
Unless the applicable prospectus supplement specifies otherwise, the Debt
Securities will not be listed on any securities exchange.
Unless the applicable prospectus supplement specifies otherwise, Northwest
will issue Debt Securities in fully registered form without coupons. If
Northwest issues Debt Securities of any series in bearer form, the applicable
prospectus supplement will describe the special restrictions and considerations,
including special offering restrictions and special Federal income tax
considerations, applicable to those Debt Securities and to payment on and
transfer and exchange of those Debt Securities. Bearer Securities will be
transferable by delivery.
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain Federal income tax consequences and
special considerations applicable to those Debt Securities will be described in
the applicable prospectus supplement.
The applicable prospectus supplement also will set forth the foreign
currency or currency units and describe the restrictions, elections, certain
Federal income tax considerations, specific terms and other information with
respect to the issue of Debt Securities, if:
- the purchase price of any Debt Securities is payable in one or more
foreign currencies or currency units,
- any Debt Securities are denominated in one or more foreign currencies
or currency units, or
- the principal of, premium, if any, or interest, if any, on any Debt
Securities is payable in one or more foreign currencies or currency units.
DENOMINATIONS, PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Northwest will issue Registered Securities in denominations of $1,000 and
integral multiples of $1,000, and Bearer Securities in denominations of $5,000.
In each case, Northwest may issue Debt Securities in other denominations and
currencies as may be in the terms of the Debt Securities of any particular
series. Subject to any applicable laws or regulations, Northwest will make
payments on the Debt Securities in the designated currency at the designated
office or agency of Northwest, unless the applicable prospectus supplement sets
forth otherwise. However, Northwest at its option may make interest payments, if
any, on Debt Securities in registered form:
- by checks mailed by the Trustee to the holders of Debt Securities
entitled to interest payments at their registered addresses, or
- by wire transfer to an account maintained by the Person entitled to
interest payments as specified in the Register.
Unless the applicable prospectus supplement indicates otherwise, Northwest will
pay any installment of interest on Debt Securities in registered form to the
Person in whose name the Debt Security is registered at the close of business on
the regular record date for that installment of interest.
Subject to any applicable laws and regulations, Northwest will make payments
on Debt Securities in bearer form in the currency and in the manner designated
in the applicable prospectus supplement at the paying agencies outside the
United States as it may appoint from time to time. The applicable prospectus
supplement will name the paying agents outside the United States initially
appointed by
7
<PAGE>
Northwest for a series of Debt Securities. Northwest may at any time designate
additional paying agents or rescind the designation of any paying agents.
However, if Debt Securities of a series are issuable as Registered Securities,
Northwest will be required to maintain at least one paying agent in each Place
of Payment for that series, and if Debt Securities of a series are issuable as
Bearer Securities, Northwest will be required to maintain a paying agent in a
Place of Payment outside the United States where the Debt Securities of that
series and any related coupons may be presented and surrendered for payment. In
connection with the payment of the principal of, premium, if any, and interest,
if any, on the Debt Security, Northwest will have the right to require a holder
of any Debt Security to certify information to Northwest. In the absence of that
certification, Northwest will be entitled to rely on any legal presumption to
enable Northwest to determine its duties and liabilities, if any, to deduct or
withhold taxes, assessments or governmental charges from that payment.
Unless the applicable prospectus supplement sets forth otherwise, Registered
Securities will be transferable or exchangeable at the agency of Northwest
designated by it from time to time. Debt Securities may be transferred or
exchanged without service charge, other than any tax or other governmental
charge imposed in connection with the transfer or exchange.
If Northwest redeems any Debt Securities in part, Northwest will not be
required:
(1) to issue, register the transfer of or exchange Debt Securities of
any series during a period beginning at the opening of business 15 days
before any selection of Debt Securities of the series to be redeemed and
ending at the close of business on
- the day of mailing of the relevant notice of redemption, if the
Debt Securities of that series are issuable only as Registered
Securities,
- the day of the first publication of the relevant notice of
redemption, if the Debt Securities of that series are issuable only as
Bearer Securities, or
- the day of mailing of the relevant notice of redemption, if the
Debt Securities of that series are issuable both as Bearer Securities and
as Registered Securities and there is no publication;
(2) to register the transfer or exchange of any Registered Securities,
or their portion, called for redemption or otherwise surrendered for
repayment, except the unredeemed or unrepaid portion of any Registered
Security being redeemed or repaid in part; or
(3) to exchange any Bearer Security called for redemption, except to
exchange that Bearer Security for a Registered Security of that series and
like tenor which is immediately surrendered for redemption.
SUBORDINATION OF SENIOR SUBORDINATED DEBT SECURITIES
As set forth in the Subordinated Indenture, the obligation of Northwest to
pay the principal of, premium, if any, and interest, if any, on the Senior
Subordinated Debt Securities will be subordinated and junior in right of payment
to the prior payment in full of all Senior Indebtedness of Northwest. The Senior
Subordinated Debt Securities will rank equally with any future Indebtedness of
Northwest which by its terms states that it will rank equally with the Senior
Subordinated Debt Securities. The Senior Subordinated Debt Securities will rank
senior to all other existing and future subordinated Indebtedness or other
subordinated obligations of Northwest. However, payment from the money or the
proceeds of U.S. Government Obligations held in any defeasance trust described
under "Defeasance" below is not subordinate to any Senior Indebtedness or
subject to the restrictions described in this prospectus.
"Senior Indebtedness" of Northwest means all Indebtedness of Northwest
(other than the Senior Subordinated Debt Securities) unless the Indebtedness, by
its terms or the terms of the instrument
8
<PAGE>
creating or evidencing it, is subordinate in right of payment to or equal with
the Senior Subordinated Debt Securities. Senior Indebtedness, however, does not
include:
(a) any Indebtedness, guarantee or other obligation of Northwest that is
subordinated or junior in any respect to any other Indebtedness of
Northwest, or
(b) any Indebtedness of Northwest to any of its Subsidiaries or to any
Person of which Northwest is a Subsidiary.
"Indebtedness" of any Person means, without duplication, the principal of,
premium, if any, and any accrued and unpaid interest (including post-petition
interest, whether or not allowable as a claim in bankruptcy) on:
(1) indebtedness of that Person for money borrowed;
(2) guarantees by that Person of indebtedness for money borrowed by any
other Person;
(3) indebtedness of that Person evidenced by notes, debentures, bonds or
other instruments of indebtedness, for payment of which that Person is
responsible or liable;
(4) obligations for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction;
(5) obligations of that Person under Capital Leases and Flight Equipment
leases;
(6) obligations under interest rate and currency swaps, caps, collars
options, forward or spot contracts or similar arrangements or with respect
to foreign currency hedges or aircraft fuel hedges;
(7) commitment and other bank financing fees under contractual
obligations associated with bank debt;
(8) any indebtedness representing the deferred and unpaid purchase price
of any property or business; and
(9) all deferrals, renewals, extensions and refundings of any of these
indebtedness or obligations.
However, Indebtedness does not include:
(a) amounts owed to trade creditors in the ordinary course of business,
(b) nonrecourse indebtedness secured by real property located outside
the United States, or
(c) operating lease rental payments (other than Flight Equipment lease
rental payments) in the ordinary course of business.
Northwest may not pay the principal of, premium, if any, or interest on the
Senior Subordinated Debt Securities or deposit pursuant to the provisions
described under "Defeasance" below if:
(1) any Senior Indebtedness is not paid when due (following the
expiration of any applicable grace period); or
(2) any other default on Senior Indebtedness occurs and the maturity of
any Senior Indebtedness is accelerated in accordance with its terms,
unless, in either case,
(a) the failure to pay or the acceleration relates to Senior
Indebtedness in an aggregate amount equal to or less than $20 million;
(b) the default has been cured or waived or has ceased to exist;
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(c) the acceleration has been rescinded; or
(d) the Senior Indebtedness has been paid in full.
A failure to make any payment with respect to the Senior Subordinated Debt
Securities as a result of the foregoing provisions will not limit the right of
the holders of the Senior Subordinated Debt Securities to accelerate the
maturity as a result of the payment default.
If any distribution of the assets of Northwest is made upon any dissolution,
total or partial liquidation or reorganization of or similar proceeding relating
to Northwest, the holders of Senior Indebtedness will be entitled to receive
payment in full before the holders of the Senior Subordinated Debt Securities
are entitled to receive any payment. Because of this subordination, in the event
of insolvency, creditors of Northwest who are holders of Senior Indebtedness or
of other unsubordinated Indebtedness may recover more, ratably, than the holders
of the Senior Subordinated Debt Securities.
THE PARENT GUARANTY
NWA Corp. will unconditionally guarantee, pursuant to the Indentures, the
due and punctual payment of the principal of, premium, if any, and interest, if
any, on the Debt Securities when they become due, whether by acceleration or
otherwise. The Parent Guaranty will be enforceable without any need first to
enforce Debt Securities against Northwest. As set forth in the Subordinated
Indenture, the Parent Guaranty of the Senior Subordinated Debt Securities will
be subordinated and junior in right of payment to the prior payment in full of
all Senior Indebtedness of NWA Corp. The terms of the subordination will
parallel the subordination terms applicable to the Senior Subordinated Debt
Securities as set forth above under "Subordination of Senior Subordinated Debt
Securities." For purposes of the Parent Guaranty, Senior Indebtedness of NWA
Corp. means all Indebtedness of NWA Corp. other than the Parent Guaranty, unless
the Indebtedness, by its terms or by the terms of the instrument creating or
evidencing it, is subordinate in right of payment to or equal with the Parent
Guaranty. However, the Senior Indebtedness of NWA Corp. does not include any
Indebtedness of NWA Corp. to any of its subsidiaries. The Parent Guaranty of the
Senior Subordinated Debt Securities will rank equally with any future
Indebtedness of NWA Corp. which by its terms states that it will rank equally
with the Parent Guaranty of the Senior Subordinated Debt Securities. The Parent
Guaranty of the Senior Subordinated Debt Securities will rank senior to all
other existing and future subordinated Indebtedness or other subordinated
obligations of NWA Corp.
GLOBAL DEBT SECURITIES
Northwest may issue Debt Securities of a series in whole or in part as one
or more fully registered global securities (a "Registered Global Security") that
will be deposited with a depositary (the "Depositary") or with a nominee for the
Depositary identified in the applicable prospectus supplement. In that case,
Northwest will issue one or more Registered Global Securities in a denomination
or aggregate denominations equal to the portion of the aggregate principal
amount of outstanding Debt Securities of the series to be represented by those
Registered Global Security or Securities. Unless and until it is exchanged in
whole or in part for Debt Securities in definitive certificated form, a
Registered Global Security may not be registered for transfer or exchange except
in the circumstances described in the applicable prospectus supplement and
except as a whole,
- by the Depositary for the Registered Global Security to a nominee of
that Depositary,
- by a nominee of the Depositary to the Depositary or another nominee of
the Depositary, or
- by the Depositary or any nominee of the Depositary to a successor
Depositary for that series or a nominee of the successor Depositary.
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The applicable prospectus supplement will describe the specific terms of the
depositary arrangement with respect to any portion of a series of Debt
Securities to be represented by a Registered Global Security. Northwest expects
that the following provisions will apply to depositary arrangements.
Upon the issuance of any Registered Global Security and the deposit of that
Registered Global Security with or on behalf of the Depositary for that
Registered Global Security, the Depositary will credit, on its book-entry
registration and transfer system, the respective principal amounts of the Debt
Securities represented by that Registered Global Security to the accounts of
institutions ("participants") that have accounts with the Depositary or its
nominee. The accounts to be credited will be designated by the underwriters or
agents engaging in the distribution of the Debt Securities or by Northwest, if
Northwest directly offers and sells the Debt Securities. Ownership of beneficial
interests in a Registered Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in a Registered Global Security will be shown on, and
the transfer of that ownership interest will be effected only through, records
maintained by the Depositary for that Registered Global Security or by its
nominee. Ownership of beneficial interests in a Registered Global Security by
persons that hold through participants will be shown on, and the transfer of
that ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of the securities
in certificated form. These limitations and laws may impair the ability to
transfer beneficial interests in the Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of that Registered Global Security, the Depositary or
its nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by that Registered Global Security for all
purposes under the Indentures. Unless the applicable prospectus supplement
specifies otherwise and except as specified below, owners of beneficial
interests in a Registered Global Security will not be entitled to have Debt
Securities of the series represented by that Registered Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of that series in certificated form and will not be
considered the holders of the Debt Securities for any purposes under the
Indentures. Accordingly, each person who owns a beneficial interest in a
Registered Global Security must rely on the procedures of the Depositary and, if
such person is not a participant, on the procedures of the participant through
which that person owns its interest, to exercise any rights of a holder under
the Indentures. The Depositary may grant proxies and otherwise authorize
participants to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action which a holder is entitled to give or
take under the Indentures. Northwest understands that, under existing industry
practices, if Northwest requests any action of holders or an owner of a
beneficial interest in a Registered Global Security desires to give any notice
or take any action a holder is entitled to give or take under the Indentures,
the Depositary would authorize the participants to give the notice or take the
action, and participants would authorize beneficial owners who own through the
participants to give the notice or take the action or would otherwise act upon
the instructions of beneficial owners who own through them.
Unless the applicable prospectus supplement specifies otherwise, payments
with respect to principal, premium, if any, and interest, if any, on Debt
Securities represented by a Registered Global Security registered in the name of
a Depositary or its nominee will be made to such Depositary or its nominee, as
the case may be, as the registered owner of the Registered Global Security.
Northwest expects that the Depositary for any Debt Securities represented by
a Registered Global Security, upon receipt of any payment of principal, premium
or interest, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of that Registered Global Security as shown on the records of the
Depositary. Northwest also expects that payments by participants to owners of
beneficial interests in a Registered
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Global Security held through the participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names," and will be the
responsibility of the participants. None of Northwest, NWA Corp., Old NWA Corp.,
the Trustee or any agent of Northwest shall have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of a Registered Global Security, or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
Unless the applicable prospectus supplement specifies otherwise, if the
Depositary for any Debt Securities represented by a Registered Global Security
is at any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by Northwest within ninety days, Northwest will
issue those Debt Securities in definitive certificated form in exchange for that
Registered Global Security. In addition, Northwest may at any time and in its
sole discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in that event, will
issue Debt Securities of that series in definitive certificated form in exchange
for all of the Registered Global Securities representing those Debt Securities.
Further, if Northwest so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Registered Global Security
representing Debt Securities of that series may, on terms acceptable to
Northwest and the Depositary for that Registered Global Security, receive Debt
Securities of that series in definitive form registered in the name of that
beneficial owner or its designee.
CONSOLIDATION, MERGER OR SALE BY NORTHWEST OR NWA CORP.
Each Indenture provides that neither Northwest nor NWA Corp. may merge or
consolidate with or into any other corporation or sell, convey, transfer, lease
or otherwise dispose of all or substantially all of its assets to any Person,
unless:
(1) (A) in the case of a merger or consolidation, Northwest or NWA Corp.
is the surviving corporation, as the case may be, or
(B) (i) in the case of a merger or consolidation where Northwest or
NWA Corp. is not the surviving corporation or (ii) in the case of the sale,
conveyance or other disposition of all or substantially all of the assets,
- the resulting, successor or acquiring Person is a corporation
organized and existing under the laws of the United States of America or
its State or the District of Columbia, and
- that corporation expressly assumes by supplemental indenture all
the obligations of Northwest under the Debt Securities, any related
coupons and the Indentures, or all the obligations of NWA Corp. under the
Parent Guaranty and the Indentures, as the case may be;
(2) immediately after giving effect to the merger or consolidation, or
the sale, conveyance, transfer, lease or other disposition (including,
without limitation, any Debt directly or indirectly incurred or anticipated
to be incurred in connection with or in respect of that transaction), no
Default or Event of Default will have occurred and be continuing; and
(3) certain other conditions are met.
If a successor corporation assumes the obligations of Northwest or NWA
Corp., as the case may be, then that successor corporation will succeed to and
be substituted for Northwest or NWA Corp., as the case may be, under the
Indentures and under the Debt Securities and any related coupons or under the
Parent Guaranty, as the case may be, and all obligations of Northwest or NWA
Corp., as the case may be, will terminate. If any permitted consolidation,
merger, sale, conveyance, disposition or other change of control transaction
(including a highly leveraged transaction), the holders of the Debt Securities
will not have the right to require redemption of those Debt Securities or
similar rights unless the applicable prospectus supplement sets forth otherwise.
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EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
Events of Default with respect to Debt Securities of any series issued under
the Indentures are defined in the Indentures as:
(1) default for thirty days in payment of any interest on any Debt
Security of that series or any related coupon or any additional amount
payable with respect to Debt Securities of that series as specified in the
applicable prospectus supplement when due;
(2) default in payment of principal or premium, if any, on redemption or
otherwise, or in the making of a mandatory sinking fund payment of any Debt
Securities of that series when due;
(3) default for sixty days after notice to Northwest and NWA Corp. by
the Trustee, or to Northwest, NWA Corp. and the Trustee by the holders of
25% or more in aggregate principal amount of the Debt Securities of that
series then outstanding, in the performance of any other agreement
applicable to the Debt Securities of that series, in the Indenture or in any
supplemental indenture or board resolution referred to therein under which
the Debt Securities of that series may have been issued; and
(4) certain events of bankruptcy, insolvency or reorganization of
Northwest or NWA Corp.
The applicable prospectus supplement will describe any other Events of
Default applicable to a specified series of Debt Securities. An Event of Default
with respect to a particular series of Debt Securities will not necessarily be
an Event of Default with respect to any other series of Debt Securities.
If an Event of Default specified in the Indentures occurs with respect to
the Debt Securities of any series issued under the Indentures and is continuing,
either the Trustee for that series or the holders of 25% or more in aggregate
principal amount of all of the outstanding Debt Securities of that series, by
written notice to Northwest and NWA Corp., may declare (a) the principal of all
the Debt Securities of that series to be due and payable or (b) in the case of
original issue discount Debt Securities or indexed Debt Securities, the portion
of the principal amount specified in the applicable prospectus supplement to be
due and payable. If the holders of Debt Securities give notice of the
declaration of acceleration to Northwest and NWA Corp., then they are also
required to give notice to the Trustee for that series.
The Trustee for any series of Debt Securities is required to give notice to
the holders of the Debt Securities of that series of all uncured Defaults within
ninety days after the occurrence of a Default known to it with respect to Debt
Securities of that series. However, that notice will not be given until 60 days
after the occurrence of a Default with respect to Debt Securities of that series
involving a failure to perform a covenant other than the obligation to pay
principal, premium, if any, or interest, if any, or make a mandatory sinking
fund payment. In addition, the Trustee may withhold that notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding that notice is in the interest of the holders of the Debt Securities
of that series, except in the case of a default in payment on the Debt
Securities of that series. "Default" means any event which is, or, after notice
or passage of time or both, would be, an Event of Default.
The Trustee will be under no obligation to exercise any of its rights or
powers under the Indentures at the request or direction of any of the holders of
Debt Securities, unless those holders have offered the Trustee reasonable
indemnity. Subject to those provisions for indemnification of the Trustee, the
holders of not less than a majority in aggregate principal amount of the Debt
Securities of each series affected (with each series voting as a class) may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee for that series, or exercising any trust or power
conferred on that Trustee.
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Each of NWA Corp. and Northwest will file annually with the Trustee a
certificate as to its compliance with all conditions and covenants of the
applicable Indenture.
The holders of not less than a majority in aggregate principal amount of any
series of Debt Securities by notice to the Trustee for that series may waive, on
behalf of the holders of all Debt Securities of that series, any past Default or
Event of Default with respect to that series and its consequences, and may
rescind and annul a declaration of acceleration with respect to that series,
unless a judgment or decree based on that acceleration has been obtained and
entered. However, a Default or Event of Default in the payment of the principal
of, premium, if any, or interest, if any, on any Debt Security (and any
resulting acceleration) and certain other defaults may not be waived.
MODIFICATION OF THE INDENTURES
Northwest, NWA Corp. and the Trustee may enter into one or more supplemental
indentures, without the consent of the holders of any of the Debt Securities, in
order to:
(1) evidence the succession of another corporation to Northwest or NWA
Corp. and the assumption of the covenants of Northwest or NWA Corp. by a
successor;
(2) (A) add to the covenants of Northwest or NWA Corp. or surrender any
right or power of Northwest or NWA Corp., and
(B) make the occurrence, or the occurrence and continuance, of a
default in any of those additional covenants, restrictions or conditions a
Default or an Event of Default that permits the enforcement of all or any of
the remedies provided in the Indentures.
However, in respect of any of those additional covenants,
restrictions or conditions, the supplemental indenture may:
- provide for a particular period of grace after default, which
period may be shorter or longer than the period allowed in the case of
other defaults,
- provide for an immediate enforcement upon that default, or
- limit the remedies available to the Trustee upon that default;
(3) add additional Events of Default with respect to any series;
(4) add or change any provisions to permit or facilitate the issuance of
Debt Securities in bearer form or in global form;
(5) under certain circumstances, add, change or eliminate any provision
affecting Debt Securities not yet issued;
(6) secure the Debt Securities;
(7) add to the conditions, limitations and restrictions on the
authorized amount, terms or purposes of issue, authentication and delivery
of Debt Securities as set forth in the Indentures, other conditions,
limitations and restrictions to be observed after that addition;
(8) establish the form or terms of Debt Securities;
(9) evidence and provide for successor Trustees;
(10) if allowed without penalty under applicable laws and regulations,
permit payment in respect of Debt Securities in bearer form in the United
States;
(11) correct or supplement any inconsistent provisions or add any other
provisions, on the condition that this action does not adversely affect the
interests of any holder of Debt Securities of any series issued under the
Indentures in any material respect;
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(12) cure any ambiguity or correct any mistake; or
(13) supplement any of the provisions of the Indentures to permit or
facilitate the defeasance and discharge of any series of Debt Security, on
the condition that this action does not adversely affect the interests of
the holders of that series or any other series of Debt Securities or any
related coupons in any material respect.
Northwest, NWA Corp. and the Trustee, with the consent of the holders of not
less than a majority in aggregate principal amount of the outstanding Debt
Securities of each series affected by the supplemental indenture, may execute
supplemental indentures adding any provisions to or changing or eliminating any
of the provisions of the Indentures or any supplemental indenture or modifying
the rights of the holders of Debt Securities of that series. However, no
supplemental indenture may, without the consent of the holder of each Debt
Security that is affected,
(1) change the time for payment of principal or interest on any Debt
Security;
(2) reduce the principal of, or any installment of principal of, or
interest on any Debt Security;
(3) reduce the amount of premium, if any, payable upon the redemption of
any Debt Security;
(4) reduce the amount of principal payable upon acceleration of the
maturity of an Original Issue Discount Debt Security;
(5) change the coin or currency in which any Debt Security or any
premium or interest is payable;
(6) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security;
(7) reduce the percentage in principal amount of the outstanding Debt
Securities of any series required to:
- consent to modify or amend the Indentures,
- waive compliance with certain provisions of the Indentures, or
- waive certain defaults;
(8) change the obligation of Northwest to maintain an office or agency
in the places and for the purposes specified in the Indentures;
(9) modify the obligations of NWA Corp. to make payment under the Parent
Guaranty; or
(10) modify any of the provisions in (1) through (9) above.
DEFEASANCE
If the applicable prospectus supplement so indicates, Northwest may elect
either to:
(1) defease and be discharged from any and all obligations with respect
to the Debt Securities of or within any series, except as described below
("defeasance"), or
(2) be released from its obligations with respect to certain covenants
applicable to the Debt Securities of or within any series ("covenant
defeasance"),
when Northwest deposits, in trust for the above mentioned purpose, with the
Trustee for that series of Debt Securities (or other qualifying trustee) money
and/or Government Obligations which through the payment of principal and
interest in accordance with their terms will provide money in the amount
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sufficient to pay the principal of, premium, if any, and interest, if any, on
the Debt Securities to Maturity or redemption, as the case may be, and any
mandatory sinking fund or similar payments.
When a defeasance occurs, Northwest will be deemed to:
(1) have paid and discharged the entire indebtedness represented by the
Debt Securities and any related coupons, and
(2) have satisfied all of its other obligations under the Debt
Securities and any related coupons.
However, it will not be deemed to have satisfied:
(a) its obligations with respect to the rights of holders of the Debt
Securities to receive, solely from the trust funds deposited to defease the
Debt Securities, payments in respect of the principal of, premium, if any,
and interest, if any, on the Debt Securities or any related coupons when the
payments are due, and
(b) certain other obligations as provided in the Indentures.
When a covenant defeasance occurs, Northwest will:
(1) be released only from its obligations to comply with certain
covenants contained in the Indentures relating to the Debt Securities,
(2) continue to be obligated in all other respects under those Debt
Securities, and
(3) continue to be contingently liable with respect to the payment of
principal, premium, if any, and interest, if any, with respect to those Debt
Securities.
Unless the applicable prospectus supplement specifies otherwise and except
as described below, the conditions to both defeasance and covenant defeasance
are as follows:
(1) the defeasance or covenant defeasance must not result in a breach or
violation of, or constitute a Default or Event of Default under, the
applicable Indenture, or result in a breach or violation of, or constitute a
default under, any other material agreement or instrument of Northwest or
NWA Corp.;
(2) certain bankruptcy related Defaults or Events of Default with
respect to Northwest or NWA Corp. must not have occurred and be continuing
during the period commencing on the date of the deposit of the trust funds
to defease the Debt Securities and ending on the 91st day after that date;
(3) Northwest must deliver to the Trustee an Opinion of Counsel to the
effect that the holders of the Debt Securities:
- will not recognize income, gain or loss for Federal income tax
purposes as a result of the defeasance or covenant defeasance, and
- will be subject to Federal income tax on the same amounts and in
the same manner and at all the same times as would have been the case if
the defeasance or covenant defeasance had not occurred.
In the case of defeasance, the Opinion of Counsel must refer to and
be based upon a ruling of the Internal Revenue Service or a change in
applicable Federal income tax law occurring after the date of the
Indentures;
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(4) Northwest must deliver to the Trustee an Officers' Certificate and
an Opinion of Counsel with respect to:
- compliance with the conditions precedent to the defeasance or
covenant defeasance, and
- certain registration requirements under the Investment Company Act
of 1940; and
(5) any additional conditions to the defeasance or covenant defeasance
which may be imposed on Northwest pursuant to the applicable Indenture.
The Indentures require that a nationally recognized firm of independent
public accountants deliver to the Trustee a written certification as to the
sufficiency of the trust funds deposited for the defeasance or covenant
defeasance of the Debt Securities. Holders of the Debt Securities do not have
recourse against that firm under the Indentures. If the applicable prospectus
supplement so indicates, in addition to obligations of the United States or an
agency or instrumentality of the United States, Government Obligations may
include obligations of the government or any agency or instrumentality of the
government issuing the currency in which Debt Securities of that series are
payable. If the Government Obligations deposited with the Trustee for the
defeasance of the Debt Securities decrease in value or default subsequent to
their being deposited, Northwest will have no further obligation, and the
holders of the Debt Securities will have no additional recourse against
Northwest, as a result of the decrease in value or default. As described above,
in the event of a covenant defeasance, Northwest remains contingently liable
with respect to the payment of principal, premium, if any, and interest, if any,
with respect to the Debt Securities.
Northwest may exercise its defeasance option with respect to the Debt
Securities even if it has previously exercised its covenant defeasance option.
If Northwest exercises its defeasance option, payment of the Debt Securities may
not be accelerated because of a Default or an Event of Default. If Northwest
exercises its covenant defeasance option, payment of the Debt Securities may not
be accelerated by reason of a Default or an Event of Default with respect to the
covenants to which the covenant defeasance is applicable. However, if
acceleration were to occur, the realizable value at the acceleration date of the
money and Government Obligations in the defeasance trust could be less than the
principal and interest then due on the Debt Securities, because the required
deposit in the defeasance trust is based upon scheduled cash flow rather than
market value, which will vary depending upon interest rates and other factors.
The applicable prospectus supplement may further describe the provisions, if
any, applicable to defeasance or covenant defeasance with respect to Debt
Securities of a particular series.
THE TRUSTEE
State Street Bank and Trust Company is the Trustee under the Indentures.
Northwest and NWA Corp. also maintain banking and other commercial relationships
with State Street Bank and Trust Company and its affiliates in the ordinary
course of business and State Street Bank and Trust Company acts as Trustee under
several other indentures for NWA Corp. and Northwest.
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DESCRIPTION OF WARRANTS
Northwest may issue Warrants to purchase Debt Securities. Northwest may
issue Warrants together with or separately from any Debt Securities offered by
any prospectus supplement and, if it issues Warrants together with Debt
Securities, the Warrants may be attached to or separate from the Debt
Securities. Northwest will issue the Warrants under one or more separate Warrant
Agreements (each, a "Warrant Agreement") to be entered into between Northwest
and State Street Bank and Trust Company, as warrant agent (the "Warrant Agent"),
all as set forth in the prospectus supplement relating to the particular issue
of Warrants.
The statements in this prospectus relating to the Warrants and the Warrant
Agreements are summaries. You should refer to the Warrant Agreements for the
complete terms of the Warrants and the Warrant Agreements. A form of Warrant
Agreement for Warrants Sold Attached to Debt Securities and a form of Warrant
Agreement for Warrants Sold Alone have been incorporated by reference as
exhibits to the registration statement of which this prospectus is a part.
GENERAL
If Northwest offers Warrants, you should refer to the applicable prospectus
supplement which accompanies this prospectus for a description of the specific
terms of the Warrants, including:
(1) the specific designation and aggregate number of the Warrants;
(2) the offering price and the currency or composite currencies for
which the Warrants may be purchased,
(3) the designation (including whether the Debt Securities are Senior
Debt Securities or Senior Subordinated Debt Securities), aggregate principal
amount, currency or composite currencies and terms of the Debt Securities
purchasable upon exercise of the Warrants;
(4) if Warrants are issued together with any Debt Securities,
- the designation and terms of the Debt Securities with which the
Warrants are issued, and
- the number of Warrants issued with the minimum denomination of each
Debt Security;
(5) if Warrants are issued together with any Debt Securities, the date
on and after which the Warrants and the related Debt Securities will be
separately transferable;
(6) - the principal amount of Debt Securities purchasable upon exercise
of one Warrant, and
- the price or the manner of determining the price and currency or
composite currencies or other consideration, which may include Debt
Securities, for which that principal amount of Debt Securities may be
purchased;
(7) - the date on which the right to exercise the Warrants will
commence, and
- the date on which the right shall expire (the "Expiration Date");
(8) the terms of any mandatory or optional redemption by Northwest;
(9) certain Federal income tax consequences;
(10) whether the certificates for Warrants will be issued in registered
or unregistered form; and
(11) any other special terms of the Warrants.
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Unless the applicable prospectus supplement specifies otherwise, the Warrants
will not be listed on any securities exchange.
Holders of Warrant certificates may exchange them for new Warrant
certificates, may present them (if in registered form) for registration of
transfer and exchange, and may exercise them at an office or agency of the
Warrant Agent maintained for that purpose (the "Warrant Agent Office"). No
service charge will be made for any transfer or exchange of Warrant
certificates, but Northwest may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with the transfer or
exchange. Prior to the exercise of their Warrants, holders of Warrants will not
have any of the rights of holders of the Debt Securities that they may purchase
upon the exercise of the Warrants. These rights include the right to receive
payments of principal of, premium, if any, or interest, if any, on the Debt
Securities purchasable upon the exercise or to enforce covenants in the
Indenture.
EXERCISE OF WARRANTS
Each Warrant will entitle its holder to purchase the principal amount of
Debt Securities (a) at the exercise price, (b) for the consideration and (c)
during the period or periods, in each case as set forth in, or calculable from,
the prospectus supplement relating to the Warrants. Holders of Warrants may
exercise their Warrants at any time during the specified period up to 5:00 P.M.
New York City time on the Expiration Date set forth in the applicable prospectus
supplement. After the close of business on the Expiration Date, or a later date
to which the Expiration Date may be extended by Northwest, unexercised Warrants
will become void.
Holders of Warrants may exercise their Warrants by:
(1) paying the Warrant Agent the amount provided in the applicable
prospectus supplement required to purchase the Debt Securities purchasable
upon the exercise of the Warrants, and
(2) providing the Warrant Agent with certain information set forth on
the reverse side of the Warrant certificate.
Unless the applicable prospectus supplement specifies otherwise, when the
Warrant Agent receives the payment and the Warrant certificate properly
completed and duly executed at the Warrant Agent Office or any other office or
agency indicated in the applicable prospectus supplement, Northwest will, as
soon as practicable, issue and deliver the Debt Securities purchasable upon the
exercise. If fewer than all of the Warrants represented by the Warrant
certificate are exercised, a new Warrant certificate will be issued for the
amount of unexercised Warrants.
MODIFICATION OF WARRANT AGREEMENTS
Northwest and the Warrant Agent may supplement or amend the Warrant
Agreement, without the consent of any Warrantholder, in order to:
(1) cure any ambiguity;
(2) correct or supplement any provision contained in the Warrant
Agreement, which may be defective or inconsistent with any other provisions;
or
(3) make other provisions in regard to matters or questions arising
under the Warrant Agreement, which Northwest and the Warrant Agent may deem
necessary or desirable and which do not adversely affect the interests of
the Warrantholders.
19
<PAGE>
WARRANT AGENT
State Street Bank and Trust Company will act as the Warrant Agent under the
Warrant Agreement. Northwest and NWA Corp. maintain banking and other commercial
relationships with State Street Bank and Trust Company and its affiliates in the
ordinary course of business. The Warrant Agent will act solely as an agent of
Northwest in connection with the Warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of Warrants or
beneficial owners of Warrants.
PLAN OF DISTRIBUTION
Northwest may sell Securities (a) through underwriters, (b) directly to
investors or other persons or (c) through dealers or agents. The applicable
prospectus supplement will name any underwriter, dealer or agent involved in the
offer and sale of the Offered Securities.
The Offered Securities may be sold (a) at a fixed price or prices, which may
be changed, (b) from time to time at market prices prevailing at the time of
sale, (c) at prices related to those market prices, or (d) at negotiated prices.
Dealer trading may take place in certain of the Offered Securities, including
Offered Securities not listed on any securities exchange.
Northwest may, from time to time, authorize underwriters acting as
Northwest's agents to offer and sell the Offered Securities upon the terms and
conditions set forth in any prospectus supplement. In connection with the sale
of Offered Securities, underwriters may be deemed to have received compensation
from Northwest in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may act
as agent. Underwriters may sell Offered Securities to or through dealers, and
those dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions, which may be changed from
time to time, from the purchasers for whom they may act as agent.
If Northwest directly uses a dealer in the sale of Offered Securities,
Northwest will sell the Offered Securities to the dealer, as principal. The
dealer may then resell the Offered Securities to the public at varying prices to
be determined by the dealer at the time of resale. The applicable prospectus
supplement will name any dealer and set forth the terms of any of those sales.
Northwest may offer and sell Offered Securities through agents designated by
Northwest from time to time. The applicable prospectus supplement will name any
agent involved in the offer or sale of the Offered Securities and set forth any
commissions payable by Northwest to that agent. Unless the applicable prospectus
indicates otherwise, the agent will be acting on a best efforts basis for the
period of its appointment.
Northwest may directly solicit offers to purchase Offered Securities and
sell them directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act of 1933 with respect to
any resale of the Offered Securities. The applicable prospectus supplement will
describe the terms of any of those sales. Except as set forth in the applicable
prospectus supplement, no director, officer or employee of Northwest or NWA
Corp. will solicit or receive a commission in connection with direct sales by
Northwest of the Offered Securities, although these persons may respond to
inquiries by potential purchasers and perform ministerial and clerical work in
connection with any of these direct sales.
The applicable prospectus supplement will set forth any underwriting
compensation paid by Northwest to underwriters, dealers or agents in connection
with the offering of Offered Securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers. Underwriters,
dealers and agents participating in the distribution of the Offered Securities
may be deemed to be underwriters, and any discounts and commissions received by
them and any profit
20
<PAGE>
realized by them on resale of the Offered Securities may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933.
Underwriters, dealers and agents may be entitled, under agreements with
Northwest and NWA Corp., to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act of
1933, and to reimbursement by Northwest and NWA Corp. for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, NWA Corp., Northwest and NWA Corp.'s other subsidiaries in the
ordinary course of business.
If the applicable prospectus supplement so indicates, subject to existing
market conditions, Northwest will authorize dealers acting as Northwest's agents
to solicit offers by certain institutions to purchase Offered Securities from
Northwest at the public offering price set forth in the applicable prospectus
supplement pursuant to Delayed Delivery Contracts ("Contracts") that provide for
payment and delivery on the date or dates stated in the applicable prospectus
supplement. Each Contract will be for an amount not less than, and the aggregate
principal amount of Offered Securities sold pursuant to Contracts shall not be
less nor more than, the respective amounts stated in the applicable prospectus
supplement. Institutions with whom Contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and other institutions, but will in all
cases be subject to the approval of Northwest. Contracts will not be subject to
any conditions, except the purchase by an institution of the Offered Securities
covered by its Contracts will not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which the institution is
subject. The applicable prospectus supplement will indicate the commission that
will be granted to underwriters and agents soliciting purchases of Offered
Securities pursuant to Contracts accepted by Northwest. Agents and underwriters
will have no responsibility in respect of the delivery or performance of
Contracts.
The Offered Securities may or may not be listed on a national securities
exchange or a foreign securities exchange. If Northwest uses an underwriter or
underwriters in the sale of any Offered Securities, the applicable prospectus
supplement will contain a statement as to the underwriters' intention, if any,
at the date of the prospectus supplement to make a market in the Offered
Securities. No assurances can be given that there will be a market for the
Offered Securities.
The applicable prospectus supplement will set forth the place and time of
delivery for the Offered Securities. Northwest will issue the Debt Securities
that are issuable upon exercise of Warrants upon payment of the exercise and
otherwise in accordance with the relevant terms applicable to the Warrants and
described in the applicable prospectus supplement.
LEGAL OPINIONS
Unless the applicable prospectus supplement indicates otherwise, the
validity of the Debt Securities, the Parent Guaranty and Warrants offered by
this prospectus will be passed upon for Northwest and NWA Corp. by Simpson
Thacher & Bartlett, New York, New York. In rendering that opinion, Simpson
Thacher & Bartlett will be relying as to matters of Minnesota law on an opinion
from the Office of the General Counsel of NWA Corp. and Northwest.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedule of NWA Corp. included in NWA Corp.'s Annual
Report on Form 10-K for the year ended December 31, 1998, as set forth in their
report on the consolidated financial statements and schedule incorporated by
reference in this prospectus. Those consolidated financial statements and
schedule are incorporated by reference in this prospectus in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
21
<PAGE>
$1,500,000,000
NORTHWEST AIRLINES, INC.
DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES
------------------
Payment of Principal Premium, if any, and Interest Fully and Unconditionally
Guaranteed by
NORTHWEST AIRLINES CORPORATION
---------------
<PAGE>
SUBJECT TO COMPLETION, DATED , 1999
PROSPECTUS
$1,500,000,000
NORTHWEST AIRLINES, INC.
PASS THROUGH CERTIFICATES
------------------
Applicable Underlying Payments Fully and Unconditionally
Guaranteed by
NORTHWEST AIRLINES CORPORATION
---------------
Northwest Airlines, Inc. may from time to time offer pass through
certificates. Pass through certificates may be issued in one or more series in
amounts, at prices and on terms to be determined at the time of the offering.
The pass through certificates will represent interests in the assets of the
pass through trusts formed to finance the acquisition of specified aircraft. The
assets of the pass through trusts will include equipment notes issued
(a) on a nonrecourse basis by one or more owner trustees pursuant to
separate leveraged lease transactions to finance or refinance a portion of
the cost of aircraft which have been or will be leased to Northwest
Airlines, Inc., or
(b) with recourse to Northwest Airlines, Inc. to finance all or a
portion of the cost of, or to purchase all or a portion of the outstanding
debt with respect to, aircraft which have been or will be purchased and
owned by Northwest Airlines, Inc.
The pass through certificates will not represent interests in or obligations
of Northwest Airlines, Inc. or any of its affiliates. Northwest Airlines
Corporation will fully and unconditionally guarantee the lease and recourse
obligations of Northwest Airlines, Inc. referred to above.
When we decide to sell a particular series of pass through certificates, we
will provide the specific terms thereof in a prospectus supplement. You should
read this prospectus and any prospectus supplement carefully before you invest.
This prospectus may not be used to consummate sales of pass through certificates
unless accompanied by a prospectus supplement.
The pass through certificates may be sold to or through underwriters,
through dealers or agents or directly to purchasers. The prospectus supplement
will set forth the names of any underwriters, dealers or agents involved in the
sale of the pass through certificates in respect of which this prospectus is
being delivered, the proposed amounts, if any, to be purchased by underwriters
and the compensation, if any, of such underwriters or agents.
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
------------------------
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
About This Prospectus...................................................................................... 2
Incorporation of Certain Documents by Reference............................................................ 3
Disclosure Regarding Forward-looking Statements............................................................ 3
The Company................................................................................................ 4
General Outline of Trust Structure......................................................................... 4
Use of Proceeds............................................................................................ 6
Ratio of Earnings to Fixed Charges......................................................................... 6
Description of the Certificates............................................................................ 7
Description of the Equipment Notes......................................................................... 20
United States Federal Income Tax Consequences.............................................................. 25
ERISA Considerations....................................................................................... 29
Plan of Distribution....................................................................................... 30
Legal Opinions............................................................................................. 31
Experts.................................................................................................... 31
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED IN THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT, INCLUDING THE INFORMATION INCORPORATED BY REFERENCE. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. NORTHWEST
AIRLINES, INC. WILL OFFER TO SELL THE SECURITIES AND SEEK OFFERS TO BUY THE
SECURITIES, ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF
DELIVERY OF THIS PROSPECTUS OR OF ANY SALES OF THE SECURITIES.
ABOUT THIS PROSPECTUS
This prospectus is part of registration statements that we filed with the
Securities and Exchange utilizing a "shelf" registration process. Under this
shelf process, we may sell pass through certificates described in this
prospectus in one or more offerings up to a total dollar amount of
$1,500,000,000 or the equivalent of this amount in foreign currencies or foreign
currency units.
This prospectus provides you with a general description of the pass through
certificates we may offer. Each time we offer pass through certificates, we will
provide you with a prospectus supplement that will describe the specific
amounts, prices and terms of the offered securities. The prospectus supplement
may also add, update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement together with
additional information described below under "Incorporation of Certain Documents
by Reference."
This prospectus does not contain all of the information in the registration
statements. Statements we make in this prospectus about the contents of any
contract, agreement or other document are not necessarily complete. If that
contract, agreement or other document has been filed as an exhibit to the
registration statements, we refer you to the exhibit for a more complete
description. The information in this prospectus is accurate only as of the date
of this prospectus, regardless of the time of delivery of this prospectus or any
sale of the securities.
In this prospectus, "Northwest" refers to Northwest Airlines, Inc., "NWA
Corp." to Northwest Airlines Corporation and the "Company," "we," "us" or "our"
to NWA Corp. and its consolidated subsidiaries.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
NWA Corp. files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
over the internet at the SEC's web site at http://www.sec.gov. Northwest is not
required to file separate reports, proxy and information statements or other
information with the SEC pursuant to the Securities Exchange Act of 1934.
Instead, we have provided information with respect to Northwest, to the extent
required, in filings made by NWA Corp.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we complete our offering of the securities:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999; and
- Current Reports on Form 8-K filed on January 24, 1999, February 24, 1999
and April 19, 1999.
You may request a copy of these filings (other than exhibits to them) at no
cost, by writing or telephoning us at the following address:
Secretary's Office
Northwest Airlines Corporation
5101 Northwest Drive, Dept. A1180
St. Paul, Minnesota 55111-3034
Telephone: (612) 726-2111
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are subject to a number
of risks and uncertainties, all of which are difficult to predict and many of
which are beyond the Company's control. Forward-looking statements are typically
identified by the words "may," "will," "believe," "expect," "anticipate,"
"intend," "estimate" and similar expressions. Actual results could differ
materially from those contemplated by these forward-looking statements as a
result of a number of factors. It is not reasonably possible to itemize all of
the many factors and specific events that could affect the outlook of an airline
operating in the global economy. Some factors that could significantly impact
expected capacity, load factors, revenues, expenses and cash flows include the
airline pricing environment, fuel costs, labor negotiations both at the Company
and other carriers, low-fare carrier expansion, capacity decisions of other
carriers, actions of the U.S. and foreign governments, foreign currency exchange
rate fluctuation, inflation, the general economic environment in the U.S. and
other regions of the world and other factors discussed herein.
In light of these risks and uncertainties, there can be no assurance that
the results and events contemplated by the forward-looking statements contained
in this prospectus will in fact be realize. Potential investors are cautioned
not to place undue reliance on these forward-looking statements. The Company
does not undertake any obligation to update or revise any forward-looking
statements. All subsequent written or oral forward-looking statements
attributable to the Company or persons acting on behalf of the Company are
expressly qualified in their entirety by the factors described above.
3
<PAGE>
THE COMPANY
Northwest, the principal wholly-owned subsidiary of NWA Corp., operates the
world's fourth largest airline (as measured by 1997 revenue passenger miles
("RPMs")) and is engaged in the business of transporting passengers and cargo.
Northwest's business focuses on the development of a global airline network
through its strategic assets that include:
- domestic hubs at Detroit, Minneapolis/St. Paul and Memphis;
- an extensive Pacific route system with hubs at Tokyo and Osaka;
- a transatlantic alliance with KLM Royal Dutch Airlines, which operates
through a hub in Amsterdam and, subject to regulatory approvals, with
Alitalia which operates through hubs in Rome and Milan; and
- a global alliance with Continental Airlines, Inc.
Northwest operates substantial domestic and international route networks and
directly serves more than 150 cities in 21 countries in North America, Asia and
Europe. Northwest had more than 50.5 million enplanements and flew over 66.7
billion RPMs in 1998.
On November 20, 1998 NWA Corp. effected a holding company reorganization. As
a result, Northwest Airlines Holding Corporation (formerly known as Northwest
Airlines Corporation and, prior to the reorganization, the publicly traded
holding company, "Old NWA Corp.") became a direct wholly-owned subsidiary of NWA
Corp. NWA Corp. is now the publicly traded holding company, which owns directly
Old NWA Corp. and indirectly the holding and operating subsidiaries of Old NWA
Corp. References in this prospectus to NWA Corp. for time periods prior to
November 20, 1998 refer to Old NWA Corp.
Our principal executive offices are located at 2700 Lone Oak Parkway, Eagan,
Minnesota 55121; our mailing address is 5101 Northwest Drive, St. Paul,
Minnesota 55111-3034 and our telephone number is (612) 726-2111.
GENERAL OUTLINE OF TRUST STRUCTURE
A separate Northwest Airlines Pass Through Trust (each, a "Trust") will be
formed for each series or class of pass through certificates ("Certificates").
Each Trust will be formed pursuant to the Pass Through Trust Agreement (each, a
"Basic Agreement") and a supplement thereto (a "Trust Supplement") to be entered
into among Northwest, NWA Corp. and the trustee named therein (the "Trustee"),
as trustee under the Trust. Each Certificate in a series or class will represent
a fractional undivided interest in the related Trust and will have no rights,
benefits or interests in respect of any other Trust. The property of the Trusts
(the "Trust Property") will consist of
- equipment notes issued (a) on a nonrecourse basis by one or more owner
trustees pursuant to separate leveraged lease transactions (the "Leased
Aircraft Notes") to finance or refinance a portion of the equipment cost
of aircraft, including engines (each, a "Leased Aircraft" and,
collectively, the "Leased Aircraft"), which have been or will be leased to
Northwest pursuant to a separate lease agreement (each such lease
agreement, a "Lease") for each Leased Aircraft, or (b) with recourse to
Northwest (the "Owned Aircraft Notes" and, together with any Leased
Aircraft Notes, the "Equipment Notes") to finance all or a portion of the
equipment cost of, or to purchase all or a portion of the outstanding debt
with respect to, aircraft, including engines (each, an "Owned Aircraft"
and, collectively, the "Owned Aircraft"; together with Leased Aircraft,
the "Aircraft"), which have been or will be purchased and owned by
Northwest;
- the rights of such trust to acquire Equipment Notes under the related note
purchase or refunding agreements;
4
<PAGE>
- in the case of a delayed purchase of aircraft, the rights of such Trust in
respect of certain escrowed funds;
- if so specified in the related prospectus supplement, the rights of such
Trust under an intercreditor agreement (the "Intercreditor Agreement")
with respect to cross-subordination or other intercreditor matters;
- if so specified in the related prospectus supplement, monies receivable
under any liquidity facility arrangements for such Trust; and
- funds from time to time deposited with the related Trustee.
Concurrently with the execution and delivery of each Trust Supplement, the
Trustee will enter into one or more note purchase or refunding agreements (each
such agreement being herein referred to as a "Note Purchase Agreement") pursuant
to which it will purchase one or more Equipment Notes relating to one or more of
the Aircraft described in the applicable prospectus supplement. Pursuant to the
applicable Note Purchase Agreements, the Trustee will purchase one or more
Equipment Notes. The Equipment Notes that constitute the property of each Trust
will have identical interest rates (in each case equal to the rate applicable to
the Certificates issued by such Trust). The maturity dates of the Equipment
Notes acquired by each Trust will occur on or before the final distribution date
applicable to the Certificates issued by such Trust. The Trustee will distribute
the amount of payments of principal, premium, if any, and interest received by
it as holder of the Equipment Notes to the Certificateholders of the Trust in
which such Equipment Notes are held. See "Description of the Certificates" and
"Description of the Equipment Notes."
Interest paid on the Equipment Notes held in each Trust will be passed
through to the holders of the Certificates relating to such Trust on the dates
and at the rate per annum set forth in the prospectus supplement relating to
such Certificates until the final distribution date for such Trust. Principal
paid on the Equipment Notes held in each Trust will be passed through to the
holders of the Certificates relating to such Trust in scheduled amounts on the
dates set forth in the prospectus supplement relating to such Certificates until
the final distribution date for such Trust. The Equipment Notes issued with
respect to any Aircraft will be secured by a security interest in such Aircraft
and, in the case of the Leased Aircraft, by a security interest in the related
Lease, including the right to receive rentals payable in respect of such Leased
Aircraft by Northwest.
The Leased Aircraft Notes will be issued under separate trust indentures
(the "Leased Aircraft Indentures") between a bank, trust company or other
institution specified in the related prospectus supplement, as trustee
thereunder (in such capacity, herein referred to as the "Loan Trustee"), and an
institution specified in the related prospectus supplement acting, not in its
individual capacity, but solely as owner trustee (an "Owner Trustee") of a
separate trust for the benefit of one or more institutional investors (each, an
"Owner Participant"). With respect to each Leased Aircraft, the related Owner
Participant will have provided or will provide from sources other than the
Leased Aircraft Notes a portion of the equipment cost of the related Leased
Aircraft. No Owner Participant, however, will be personally liable for any
amount payable under the related Leased Aircraft Indenture or the Leased
Aircraft Notes issued thereunder. Simultaneously with the acquisition of each
Leased Aircraft, the related Owner Trustee leased or will lease such Aircraft to
Northwest pursuant to a separate Lease. The Owned Aircraft Notes will be issued
under separate trust indentures (the "Owned Aircraft Indentures" and, together
with any Leased Aircraft Indentures, the "Indentures") between the applicable
Loan Trustee and Northwest.
Although neither the Certificates nor the Leased Aircraft Notes will be
direct obligations of, or guaranteed by, Northwest, the amounts unconditionally
payable by Northwest for lease of Leased Aircraft will be sufficient to pay in
full when due all payments required to be made on the corresponding Leased
Aircraft Notes.
5
<PAGE>
NWA Corp. will fully and unconditionally guarantee (the "Parent Guaranty")
to the holders from time to time of Certificates (i) with respect to related
Owned Aircraft Notes, the full and prompt payment of principal, premium, if any,
and interest thereon when and as the same shall become due and payable, whether
at maturity, upon redemption or otherwise and (ii) with respect to related
Leased Aircraft Notes, the full and prompt payment of all amounts payable by
Northwest under the related Lease when and as the same shall become due and
payable. The Parent Guaranty will be enforceable without any need first to
enforce the obligations of Northwest against Northwest.
With respect to Equipment Notes of differing payment priorities issued in
respect of one or more Aircraft, the rights of the holders of the related
Certificates will be subject to an intercreditor agreement (the "Intercreditor
Agreeement").
USE OF PROCEEDS
Except as set forth in a prospectus supplement for a specific offering of
Certificates, the proceeds from the sale of the Certificates will be used by the
Trustee on behalf of the applicable Trust or Trusts to purchase either (a)
Leased Aircraft Notes or (b) Owned Aircraft Notes.
Any portion of the proceeds from the sale of Certificates not used by the
Trustee to purchase Equipment Notes on or prior to the date specified therefor
in the applicable prospectus supplement will be distributed on a Special
Distribution Date (as defined below) to the applicable Certificateholders,
together with interest, but without premium. See "Description of Certificates--
Special Distribution Upon Unavailability of Aircraft."
RATIO OF EARNINGS TO FIXED CHARGES
We have set forth below the ratio of earnings to fixed charges for NWA Corp.
and its consolidated subsidiaries for the periods indicated. The ratio of
earnings to fixed charges represents the number of times that fixed charges were
covered by earnings. In computing the ratio, earnings represent consolidated
earnings (loss) before income taxes, cumulative effect of accounting change and
fixed charges (excluding capitalized interest). Fixed charges consist of
interest expense (including capitalized interest), one-third of rental expense,
which is considered representative of the interest factor, and amortization of
debt discount and expense.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
- ------------------------------------------------------- ----------------------
1994 1995 1996 1997 1998 1998 1999
- --------- --------- --------- --------- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C>
1.88 1.90 2.74 3.05 (a) 2.01 (b)
</TABLE>
- ------------------------
(a) Earnings were inadequate to cover fixed charges by $452 million for the year
ended December 31, 1998.
(b) Earnings were inadequate to cover fixed charges by $69 million for three
months ended March 31, 1999.
6
<PAGE>
DESCRIPTION OF THE CERTIFICATES
The following description of the Certificates summarizes certain general
terms and provisions of the Certificates to which any prospectus supplement may
relate. This summary relates to the Basic Agreement (the form of which has been
filed as an exhibit to the registration statement of which this prospectus is a
part) and each of the Trust Supplements, the Trusts to be formed thereby and the
Certificates to be issued by each Trust except to the extent, if any, described
in the applicable prospectus supplement. The prospectus supplement that
accompanies this prospectus contains a glossary of the material terms used with
respect to the specific series or class of Certificates being offered thereby.
The Trust Supplement relating to each series or class of Certificates and the
forms of the material operative agreements relating thereto (including, if
applicable, Note Purchase Agreement, Indenture, Lease, Trust Agreement,
participation agreement, Intercreditor Agreement and liquidity arrangement) will
be filed as exhibits to a post-effective amendment to the Registration Statement
of which this prospectus is a part, a Current Report on Form 8-K, a Quarterly
Report on Form 10-Q or an Annual Report on Form 10-K, as applicable, filed by
NWA Corp. with the SEC.
The Certificates offered pursuant to this prospectus will be limited to
$1,500,000,000 aggregate public offering price (or its equivalent (based on the
applicable exchange rate at the time of sale) in one or more foreign currencies
or currency units).
TO THE EXTENT THAT ANY PROVISION IN ANY PROSPECTUS SUPPLEMENT IS
INCONSISTENT WITH ANY PROVISION IN THIS SUMMARY, THE PROVISION OF SUCH
PROSPECTUS SUPPLEMENT WILL CONTROL.
GENERAL
Each Certificate will represent a fractional undivided interest in the Trust
created by the Trust Supplement pursuant to which such Certificate was issued.
All payments and distributions on account of the Certificates will be made only
from the related Trust Property. Each Certificate will represent a pro rata
share of the outstanding principal amount of the Equipment Notes held in the
related Trust. Unless otherwise specified in the applicable prospectus
supplement, each Certificate will be issued in minimum denominations of $1,000
or any integral multiple thereof (except that one Certificate of each Trust may
be issued in an odd amount, due to the fact that the aggregate amount offered by
such Trust may not represent an integral multiple of $1,000).
The Certificates will not represent an interest in or obligation of
Northwest, NWA Corp., the Trustee, any of the Loan Trustees or Owner Trustees in
their individual capacities, any Owner Participant, or any affiliate of any
thereof. Each Certificateholder by its acceptance of a Certificate agrees to
look solely to the income and proceeds from the Trust Property as provided in
the Basic Agreement and the applicable Trust Supplement and to its rights under
the Parent Guaranty.
The Equipment Notes issued under an Indenture may be held in more than one
Trust and one Trust may hold Equipment Notes issued under more than one
Indenture (each Indenture the Equipment Notes of which are held in a Trust, a
"Related Indenture"). Unless otherwise provided in a prospectus supplement, only
Equipment Notes having the same priority of payment (the Equipment Notes of any
such priority, a "class" or "series") may be held in the same Trust.
Interest will be passed through to Certificateholders of each Trust at the
rate per annum payable on the Equipment Notes held in such Trust, as set forth
for such Trust on the cover page of the applicable prospectus supplement.
Reference is made to the prospectus supplement that accompanies this
prospectus for a description of the specific series or class of Certificates
being offered thereby, including:
- the specific designation and title of such Certificates;
7
<PAGE>
- the Regular Distribution Dates (as defined below) and Special Distribution
Dates (as defined below) applicable to such Certificates;
- the currency or currencies (including currency units) in which such
Certificates may be denominated;
- the specific form of such Certificates, including whether or not such
Certificates are to be issued in accordance with a book-entry system;
- a description of the Equipment Notes to be purchased by such Trust,
including (a) the period or periods within which, the price or prices at
which, and the terms and conditions upon which such Equipment Notes may or
must be redeemed or defeased in whole or in part, by Northwest or, with
respect to Leased Aircraft Notes, the Owner Trustee, (b) the payment
priority of such Equipment Notes in relation to any other Equipment Notes
issued with respect to the related Aircraft, (c) any additional security
or liquidity enhancements therefor and (d) any intercreditor or other
rights or limitations between or among the holders of Equipment Notes of
different priorities issued by the same Owner Trustee;
- a description of the related Aircraft, including whether such Aircraft is
a Leased Aircraft or an Owned Aircraft;
- a description of the related Note Purchase Agreement and Related
Indentures, including a description of the events of default under the
Related Indentures, the remedies exercisable upon the occurrence of such
events of default and any limitations on the exercise of such remedies
with respect to such Equipment Notes;
- if such Certificates relate to Leased Aircraft, a description of the
related Lease, trust agreement and participation agreement, including (a)
the names of the related Owner Trustees, (b) a description of the events
of default under the related Leases, the remedies exercisable upon the
occurrence of such events of default and any limitations on the exercise
of such remedies with respect to such Leased Aircraft Notes, and (c) the
rights of the related Owner Trustee, if any, and/or Owner Participant, if
any, to cure failures of Northwest to pay rent under the related Lease;
- the extent, if any, to which the provisions of the operative documents
applicable to such Equipment Notes may be amended by the parties thereto
without the consent of the holders of, or only upon the consent of the
holders of a specified percentage of aggregate principal amount of, such
Equipment Notes;
- cross-default or cross-collateralization provisions in the Related
Indentures;
- subordination provisions among the holders of Certificates, including any
cross-subordination provisions among the holders of Certificates in
separate Trusts; and
- any other special terms pertaining to such Certificates.
If any Certificates are denominated in one or more foreign currencies or
currency units, the restrictions, certain United States federal income tax
considerations, specific terms and other information with respect to such
Certificates and such foreign currency or currency units will be set forth in
the applicable prospectus supplement.
BOOK-ENTRY REGISTRATION
GENERAL
If specified in the applicable prospectus supplement, the Certificates will
be subject to the provisions described below and under the caption "--Definitive
Certificates." Upon issuance, each
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series or class of Certificates will be represented by one fully registered
global certificate. Each global certificate will be deposited with, or on behalf
of, The Depository Trust Company ("DTC") and registered in the name of Cede &
Co. ("Cede"), or its nominee. No person acquiring an interest in such
Certificates ("Certificate Owner") will be entitled to receive a certificate
representing such person's interest in such Certificates, except as set forth
below under "--Definitive Certificates." Unless and until Definitive
Certificates are issued under the limited circumstances described herein, all
references to actions by Certificateholders shall refer to actions taken by DTC
upon instructions from DTC Participants (as defined below), and all references
herein to distributions, notices, reports and statements to Certificateholders
shall refer, as the case may be, to distributions, notices, reports and
statements to DTC or Cede, as the registered holder of such Certificates, or to
DTC Participants for distribution to Certificate Owners in accordance with DTC
procedures.
Northwest has been advised that DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and "clearing agency" registered pursuant to section 17A
of the Exchange Act. DTC was created to hold securities for its participants
("DTC Participants") and to facilitate the clearance and settlement of
securities transactions between DTC Participants through electronic
book-entries, thereby eliminating the need for physical transfer of
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a DTC Participant
either directly or indirectly ("Indirect Participants").
Certificate Owners that are not DTC Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, the Certificates may do so only through DTC Participants and
Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal and interest from the Trustee through DTC
Participants or Indirect Participants, as the case may be. Under a book-entry
format, Certificate Owners may experience some delay in their receipt of
payments, because such payments will be forwarded by the Trustee to Cede, as
nominee for DTC. DTC will forward such payments in same-day funds to DTC
Participants who are credited with ownership of the Certificates in amounts
proportionate to the principal amount of each such DTC Participant's respective
holdings of beneficial interests in the Certificates. DTC Participants will
thereafter forward payments to Indirect Participants or Certificate Owners, as
the case may be, in accordance with customary industry practices. The forwarding
of such distributions to the Certificate Owners will be the responsibility of
such DTC Participants. Unless and until the Definitive Certificates are issued
under the limited circumstances described herein, the only "Certificateholder"
will be Cede, as nominee of DTC. Certificate Owners will not be recognized by
the Trustee as Certificateholders, as such term is used in the Basic Agreement,
and Certificate Owners will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and DTC Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
the Certificates among DTC Participants on whose behalf it acts with respect to
the Certificates and to receive and transmit distributions of principal,
premium, if any, and interest with respect to the Certificates. DTC Participants
and Indirect Participants with which Certificate Owners have accounts with
respect to the Certificates similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective customers.
Accordingly, although Certificate Owners will not possess the Certificates, the
Rules provide a mechanism by which Certificate Owners will receive payments and
will be able to transfer their interests.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect Participants, the ability of a Certificate Owner to pledge
the Certificates to persons or entities that do
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not participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised Northwest that it will take any action permitted to be taken
by a Certificateholder under the Basic Agreement only at the direction of one or
more DTC Participants to whose accounts with DTC the Certificates are credited.
Additionally, DTC has advised Northwest that in the event any action requires
approval by Certificateholders of a certain percentage of beneficial interest in
each Trust, DTC will take such action only at the direction of and on behalf of
DTC Participants whose holders include undivided interests that satisfy any such
percentage. DTC may take conflicting actions with respect to other undivided
interests to the extent that such actions are taken on behalf of DTC
Participants whose holders include such undivided interests.
Neither Northwest, NWA Corp. nor the Trustee will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Certificates held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The applicable prospectus supplement will specify any additional book-entry
registration procedures applicable to Certificates denominated in a currency
other than United States dollars.
SAME-DAY SETTLEMENT AND PAYMENT
So long as the Certificates are registered in the name of Cede, as nominee
for DTC, all payments made by Northwest to the Loan Trustee under any Lease or
any Owned Aircraft Indentures will be in immediately available funds. Such
payments, including the final distribution of principal with respect to the
Certificates of any Trust, will be passed through to DTC in immediately
available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, secondary
trading in pass through certificates is generally settled in immediately
available or same-day funds. Any Certificates registered in the name of Cede, as
nominee for DTC, will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Certificates will
therefore be required by DTC to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in same-day funds
on trading activity in the Certificates.
DEFINITIVE CERTIFICATES
Unless the applicable prospectus supplement specifies otherwise, if DTC is
at any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by Northwest within ninety days, Northwest will
issue those Certificates in definitive certificated form in exchange for that
Registered Global Security. In addition, Northwest may at any time and in its
sole discretion determine not to have any of the Certificates of a series or
class represented by one or more Registered Global Securities and, in that
event, will issue Certificates of that series or class in definitive
certificated form in exchange for all of the Registered Global Securities
representing those Certificates. Further, if Northwest so specifies with respect
to the Certificates of a series or class, an owner of a beneficial interest in a
Registered Global Security representing Certificates of that series or class
may, on terms acceptable to Northwest and DTC, receive Certificates of that
series or class in definitive form registered in the name of that beneficial
owner or its designee.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify all Certificate Owners through
DTC Participants of the availability of Definitive Certificates. Upon surrender
by DTC of the certificates representing the Certificates and receipt of
instructions for re-registration, the Trustee will reissue the Certificates as
Definitive Certificates to Certificate Owners.
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Distributions of principal, premium, if any, and interest with respect to
Certificates will thereafter be made by the Trustee directly in accordance with
the procedures set forth in the Basic Agreement and the applicable Trust
Supplements, to holders in whose names the Definitive Certificates were
registered at the close of business on the applicable record date. Such
distributions will be made by check mailed to the address of such holder as it
appears on the register maintained by the Trustee. The final payment on any
Certificate, however, will be made only upon presentation and surrender of such
Certificate at the office or agency specified in the notice of final
distribution to Certificateholders.
Definitive Certificates will be freely transferable and exchangeable at the
office of the Trustee upon compliance with the requirements set forth in the
Basic Agreement and the applicable Trust Supplements. No service charge will be
imposed for any registration of transfer or exchange, but payment of a sum
sufficient to cover any tax or other governmental charge shall be required.
PAYMENTS AND DISTRIBUTIONS
Payments of principal, premium, if any, and interest with respect to the
Equipment Notes held in each Trust will be distributed by the Trustee, upon
receipt, to Certificateholders of such Trust on the dates and in the currency
specified in the applicable prospectus supplement, except
- in certain cases when some or all of such Equipment Notes are in default
as described in the applicable prospectus supplement and
- that such payments are subject to the effect of any cross-subordination or
other intercreditor provisions set forth in the prospectus supplement for
a series or class of Certificates.
Payments of principal of, and interest on, the unpaid principal amount of
the Equipment Notes held in each Trust will be scheduled to be received by the
Trustee on the dates specified in the applicable prospectus supplement (such
scheduled payments of interest and principal on the Equipment Notes to the
Trustee are herein referred to as "Scheduled Payments," and the dates specified
in the applicable prospectus supplement for distribution of Scheduled Payments
to the Trustee are herein referred to as "Regular Distribution Dates"). See
"Description of the Equipment Notes General." Subject to the effect of any
cross-subordination or other intercreditor provisions set forth in the
prospectus supplement for a series or class of Certificates, each
Certificateholder of each Trust will be entitled to receive a pro rata share of
any distribution in respect of Scheduled Payments of principal and interest made
on the Equipment Notes held in the Trust.
Payments of principal, premium, if any, and interest received by the Trustee
on account of the early redemption, if any, of the Equipment Notes relating to
one or more Aircraft held in a Trust, and payments, other than Scheduled
Payments received on a Regular Distribution Date, received by the Trustee
following default in respect of Equipment Notes held in a Trust relating to one
or more Aircraft ("Special Payments") will be distributed on the date determined
pursuant to the applicable prospectus supplement (a "Special Distribution Date")
except that, unless otherwise specified in the applicable prospectus supplement,
payments received by the Trustee following default in respect of the Equipment
Notes on a Regular Distribution Date as a result of a drawing under any
liquidity facility arrangement specified in the applicable prospectus supplement
(each, a "Liquidity Facility") provided for the benefit of the
Certificateholders shall be distributed on such Regular Distribution Date. The
Trustee will mail notice to the Certificateholders of record of the applicable
Trust not less than 20 days prior to the Special Distribution Date on which any
Special Payment is scheduled to be distributed by the Trustee stating such
anticipated Special Distribution Date.
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POOL FACTORS
The Pool Factor (as defined below) for the Trusts will decline in proportion
to the scheduled repayments of principal on the Equipment Notes held in such
Trust as described in the applicable prospectus supplement unless there has been
- an early redemption,
- a purchase of an issue of Equipment Notes by the related Owner Trustee
after an Indenture Default (as defined below),
- a default in the payment of principal in respect of one or more issues of
the Equipment Notes held in a Trust or
- certain actions have been taken following a default thereon, as described
in the applicable prospectus supplement,
in which event the Pool Factor and the Pool Balance (as defined below) of
each Trust so affected will be recomputed after giving effect thereto and notice
thereof will be mailed to the Certificateholders of such Trust. Each Trust will
have a separate Pool Factor.
Unless otherwise described in the applicable prospectus supplement, the
"Pool Balance" for each Trust or for the Certificates issued by any Trust
indicates, as of any date, the original aggregate face amount of the
Certificates of such Trust less the aggregate amount of all payments made in
respect of the Certificates of such Trust other than payments made in respect of
interest or premium thereon or reimbursement of any costs and expenses in
connection therewith. The Pool Balance for each Trust as of any Regular
Distribution Date or Special Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the Equipment Notes or other
Trust Property held in such Trust and the distribution thereof to be made on
that date.
Unless otherwise described in the applicable prospectus supplement, the
"Pool Factor" for each Trust as of any Regular Distribution Date or Special
Distribution Date is the quotient (rounded to the seventh decimal place)
computed by dividing (i) the Pool Balance by (ii) the aggregate original
principal amount of the Equipment Notes held in such Trust. The Pool Factor for
each Trust as of any Regular Distribution Date or Special Distribution Date
shall be computed after giving effect to the payment of principal, if any, on
the Equipment Notes held in such Trust and distribution thereof to be made on
that date. The Pool Factor for each Trust will initially be 1.0000000;
thereafter, the Pool Factor for each Trust will decline as described above to
reflect reductions in the Pool Balance of such Trust. The amount of a
Certificateholder's pro rata share of the Pool Balance of a Trust can be
determined by multiplying the original denomination of the holder's Certificate
of such Trust by the Pool Factor for such Trust as of the applicable Regular
Distribution Date or Special Distribution Date. The Pool Factor and the Pool
Balance for each Trust will be mailed to Certificateholders of such Trust on
each Regular Distribution Date and Special Distribution Date.
REPORTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date and Special Distribution Date, the Trustee
will include with each distribution of a Scheduled Payment or Special Payment to
Certificateholders of the related Trust a statement, giving effect to such
distribution to be made on such Regular Distribution Date or Special
Distribution Date, setting forth the following information (per $1,000 aggregate
principal amount of Certificate for such Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the amount
allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
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(iii) the Pool Balance and the Pool Factor for such Trust.
If so specified in the related prospectus supplement, the Trustee for a
series or class of Certificates may include in such statement additional
information, such as (i) the aggregate amount of funds distributed on such
payment date and the source of such funds and (ii) in the case of a delayed
purchase, certain information regarding the escrowed funds.
So long as the Certificates are registered in the name of Cede, as nominee
for DTC, on the record date prior to each Regular Distribution Date and Special
Distribution Date, the Trustee will request from DTC a Securities Position
Listing setting forth the names of all DTC Participants reflected on DTC's books
as holding interests in the Certificates on such record date. On each Regular
Distribution Date and Special Distribution Date, the Trustee will mail to each
such DTC Participant the statement described above and will make available
additional copies as requested by such DTC Participant for forwarding to
Certificate Owners.
In addition, after the end of each calendar year, the Trustee will prepare
for each Certificateholder of each Trust at any time during the preceding
calendar year a report containing the sum of the amounts determined pursuant to
clauses (i) and (ii) above with respect to the Trust for such calendar year or,
in the event such person was a Certificateholder during only a portion of such
calendar year, for the applicable portion of such calendar year, and such other
items as are readily available to the Trustee and which a Certificateholder
shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its federal income tax returns. Such report
and such other items shall be prepared on the basis of information supplied to
the Trustee by the DTC Participants and shall be delivered by the Trustee to
such DTC Participants to be available for forwarding by such DTC Participants to
Certificate Owners in the manner described above.
At such time, if any, as the Certificates are issued in the form of
Definitive Certificates, the Trustee will prepare and deliver the information
described above to each Certificateholder of record of each Trust as the name
and period of beneficial ownership of such Certificateholder appears on the
records of the registrar of the Certificates.
VOTING OF EQUIPMENT NOTES
Subject to the effect of any cross-subordination provisions set forth in the
related prospectus supplement, the Trustee, as holder of the Equipment Notes
held in each Trust, has the right to vote and give consents and waivers with
respect to such Equipment Notes under the Related Indentures. The Basic
Agreement and related Trust Supplement set forth
(i) the circumstances in which the Trustee may direct any action or cast any
vote as the holder of the Equipment Notes held in the applicable Trust
at its own discretion,
(ii) the circumstances in which the Trustee shall seek instructions from the
Certificateholders of such Trust, and
(iii) the percentage of Certificateholders required to direct the Trustee to
take any such action.
If specified in the related prospectus supplement, the right of a Trustee to
vote and give consents and waivers with respect to the Equipment Notes held in
the related Trust may, in the circumstances set forth in an intercreditor
agreement to be executed by such Trustee, be exercisable by another person
specified in such prospectus supplement.
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
The prospectus supplement related to a series or class of Certificates will
specify the events of default under the Basic Agreement (an "Event of Default")
and the Related Indentures (an "Indenture Default"). With respect to Leased
Aircraft Notes, the Indenture Defaults will include events of default
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under the related Leases (a "Lease Event of Default"). With respect to any
Equipment Notes which are supported by a Liquidity Facility the Indenture
Defaults may include events of default under such Liquidity Facility. Unless
otherwise provided in a prospectus supplement, all of the Equipment Notes issued
under the same Indenture will relate to one or more specific Aircraft and there
will be no cross-collateralization or cross-default provisions in the
Indentures. Events resulting in an Indenture Default under any particular
Indenture will not necessarily result in an Indenture Default occurring under
any other Indenture.
As described below under "--Cross-Subordination Issues," a prospectus
supplement may provide the terms of any cross-subordination provisions among
Certificateholders of separate Trusts. If such provisions are so provided,
payments made pursuant to a Related Indenture under which an Indenture Default
(and as to which payments continue to be made as scheduled) has not occurred may
be distributed first to the holders of the Certificates issued under the Trust
which holds the most senior Equipment Notes issued under all Related Indentures.
With respect to Leased Aircraft Notes, the ability of the Owner Trustee or
Owner Participant under the Related Indenture to cure Indenture Defaults,
including Indenture Defaults that result from the occurrence of a Lease Event of
Default under the related Lease, will be described in the prospectus supplement.
Unless otherwise provided in a prospectus supplement, with respect to any
Certificates or Equipment Notes entitled to the benefits of a Liquidity
Facility, a drawing under any such Liquidity Facility for the purpose of making
a payment of interest as a result of the failure by Northwest to have made a
corresponding payment will not cure an Indenture Default related to such failure
by Northwest.
The prospectus supplement related to a series or class of Certificates will
set forth the percentage of Certificateholders of such Trust entitled to direct
the Trustee to take any action with respect to the related Equipment Notes and,
if applicable, Equipment Notes issued under any other Related Indenture. If the
Equipment Notes outstanding under an Indenture are held by more than one Trust,
then the ability of the Certificateholders issued with respect to any one Trust
to cause the Loan Trustee with respect to any Equipment Notes held in such Trust
to accelerate the Equipment Notes under the Related Indenture or to direct the
exercise of remedies by the Loan Trustee under the Related Indenture will
depend, in part, upon the proportion between the aggregate principal amount of
the Equipment Notes outstanding under such Indenture and held in such Trust and
the aggregate principal amount of all Equipment Notes outstanding under such
Indenture. In addition, if cross-subordination provisions are applicable to any
series or class of Certificates, then the ability of the Certificateholders of
any one Trust holding Equipment Notes issued under Related Indentures to cause
the Loan Trustee with respect to any Equipment Notes held in such Trust to
accelerate the Equipment Notes under the Related Indenture or to direct the
exercise of remedies by the Loan Trustee under the Related Indenture will
depend, in part, upon the class or series of Notes held in such Trust. If the
Equipment Notes outstanding under an Indenture are held by more than one Trust,
then each Trust will hold Equipment Notes with different terms from the
Equipment Notes held in the other Trusts and therefore the Certificateholders of
a Trust may have divergent or conflicting interests from those of the
Certificateholders of the other Trusts holding Equipment Notes relating to the
same Indenture. In addition, so long as the same institution acts as Trustee of
each Trust, in the absence of instructions from the Certificateholders of any
such Trust, the Trustee for such Trust could for the same reason be faced with a
potential conflict of interest upon an Indenture Default. In such event, the
Trustee has indicated that it would resign as Trustee of one or all such Trusts,
and a successor trustee would be appointed in accordance with the terms of the
Basic Agreement.
The prospectus supplement for a series or class of Certificates will specify
whether and under what circumstances the Trustee may or shall sell for cash to
any person all or part of the related Equipment Notes. Any proceeds received by
the Trustee upon any such sale shall be deposited in an account established by
the Trustee for the benefit of the Certificateholders of such Trust (the
"Special Payments
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Account"). The market for Equipment Notes in default may be very limited, and
there can be no assurance that they could be sold for a reasonable price.
Furthermore, so long as the same institution acts as Trustee of multiple Trusts,
it may be faced with a conflict in deciding from which Trust to sell Equipment
Notes to available buyers. If the Trustee sells any such Equipment Notes with
respect to which an Indenture Default exists for less than their outstanding
principal amount, the Certificateholders of such Trust will receive a smaller
amount of principal distributions than anticipated and will not have any claim
for the shortfall against Northwest, any Owner Trustee, Owner Participant, the
Trustee or (except for the Parent Guaranty) their affiliates. Furthermore,
neither the Trustee nor the Certificateholders of such Trust could take any
action with respect to any remaining Equipment Notes held in such Trust so long
as no Indenture Defaults exist with respect thereto.
With respect to any Trust, the following amounts shall be deposited into the
Special Payments Account and distributed to the related Certificateholders of
such Trust on a Special Payments Date:
- Any amount, other than Scheduled Payments received on a Regular
Distribution Date, distributed to the Trustee of such Trust by the Loan
Trustee under any Indenture on account of the Equipment Notes held in such
Trust following an Indenture Default under such Indenture.
- If a prospectus supplement provides that the applicable Owner Trustee may,
under circumstances specified therein, redeem or purchase the outstanding
Equipment Notes issued under the Related Indenture, the price paid by such
Owner Trustee to the Trustee of such Trust for the Equipment Notes issued
under such Indenture and held in such Trust.
Any funds representing payments received with respect to any Equipment Notes
held in such Trust in default, or the proceeds from the sale by the Trustee of
any such Equipment Notes, held by the Trustee in the Special Payments Account
for such Trust shall, to the extent practicable, be invested and reinvested by
the Trustee in Permitted Investments pending the distribution of such funds on a
Special Distribution Date. "Permitted Investments" will be specified in the
related prospectus supplement.
The Basic Agreement provides that the Trustee of each Trust shall, within 90
days after the occurrence of a default in respect of such Trust, give to the
Certificateholders of such Trust notice, transmitted by mail, of all uncured or
unwaived defaults with respect to such Trust known to it, provided that, except
in the case of default in the payment of principal, premium, if any, or interest
on any of the Equipment Notes held in such Trust, the Trustee shall be protected
in withholding such notice if it in good faith determines that the withholding
of such notice is in the interests of such Certificateholders. The term
"default" as used in this paragraph only means the occurrence of an Event of
Default with respect to a Trust as described above, except that in determining
whether any such Event of Default has occurred, any grace period or notice in
connection therewith shall be disregarded.
The Basic Agreement contains a provision entitling the Trustee of each
Trust, subject to the duty of the Trustee during a default to act with the
required standard of care, to be offered reasonable security or indemnity by the
Certificateholders of such Trust before proceeding to exercise any right or
power under the Basic Agreement at the request of such Certificateholders.
The prospectus supplement for a series or class of Certificates will specify
the percentage of Certificateholders entitled to waive, or to instruct the
Trustee to waive, any past Event of Default with respect to such Trust and
thereby annul any direction given with respect thereto. The prospectus
supplement for a series or class of Certificates will also specify the
percentage of Certificateholders (and whether of such Trust or of any other
Trust holding Equipment Notes issued under Related Indentures) entitled to
waive, or to instruct the Trustee or the Loan Trustee to waive, any past
Indenture Default with respect to the Equipment Notes held in such Trust and
thereby annul any direction given with respect thereto.
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MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
Northwest will be prohibited from consolidating with or merging into any
other corporation or transferring substantially all of its assets as an entirety
to any other corporation unless
- (i) the surviving successor or transferee corporation shall (a) be a
"citizen of the United States" (as defined in Section 40102(a)(15) of
Title 49 of the United States Code) holding a carrier operating
certificate issued by the Secretary of Transportation pursuant to Chapter
447 of Title 49, United States Code, for aircraft capable of carrying 10
or more individuals or 6,000 pounds or more of cargo and with respect to
which there is in force an air carrier operating certificate issued
pursuant to Part 121 of the regulations under the sections of Title 49,
United States Code, relating to aviation and (b) expressly assume all of
the obligations of Northwest contained in the Basic Agreement and any
Trust Supplement, the Note Purchase Agreements and the Indentures and,
with respect to the Leased Aircraft Notes, the Participation Agreements
and the Leases, and any other operative documents;
- (ii) immediately after giving effect to such transaction, no Indenture
Default (with respect to the Owned Aircraft Notes) or Lease Event of
Default (with respect to the Leased Aircraft Notes) shall have occurred
and be continuing; and
- (iii) Northwest shall have delivered a certificate and an opinion or
opinions of counsel indicating that such transaction, in effect, complies
with such conditions.
MODIFICATIONS OF THE BASIC AGREEMENT
The Basic Agreement contains provisions permitting Northwest, NWA Corp. and
the Trustee of each Trust to enter into a supplemental trust agreement, without
the consent of the holders of any of the Certificates of such Trust,
- to provide for the formation of such Trust and the issuance of a series or
class of Certificates,
- to evidence the succession of another corporation to Northwest or NWA
Corp. and the assumption by such corporation of Northwest's or NWA Corp.'s
obligations under the Basic Agreement and the applicable Trust Supplement,
- to add to the covenants of Northwest or NWA Corp. for the benefit of
holders of such Certificates, or to surrender any right or power in the
Basic Agreement conferred upon Northwest or NWA Corp.,
- to cure any ambiguity or correct or supplement any defective or
inconsistent provision of the Basic Agreement or the applicable Trust
Supplement or to make any other provisions with respect to matters or
questions arising thereunder, provided such action shall not adversely
affect the interests of the holders of such Certificates, or to cure any
ambiguity or correct any mistake,
- to modify, eliminate or add to the provisions of the Basic Agreement to
the extent necessary to continue the qualification of the Basic Agreement
(including any supplemental agreement) under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act") and to add to the Basic
Agreement such other provisions as may be expressly permitted by the Trust
Indenture Act,
- to provide for a successor Trustee or to add to or change any provision of
the Basic Agreement as necessary to facilitate the administration of the
Trusts thereunder by more than one Trustee,
- to add, eliminate or change any provisions under such Basic Agreement that
will not adversely affect the Certificateholders in any material respect,
provided that in each case, such modification does not cause the
corresponding Trust to become taxable as an "association"
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within the meaning of Treasury Regulation Section 301.7701-2 or a
"publicly traded partnership" within the meaning of Section 7704 of the
Code taxable as a corporation and
- to make any other amendments or modifications to the Basic Agreement,
provided such amendments or modifications shall only apply to Certificates
issued thereafter.
The Basic Agreement also contains provisions permitting Northwest, NWA Corp.
and the Trustee of each Trust, with the consent of the Certificateholders of
such Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust, and, with respect to any Leased Aircraft,
with the consent of the applicable Owner Trustee (such consent not to be
unreasonably withheld), to execute supplemental trust agreements adding any
provisions to or changing or eliminating any of the provisions of the Basic
Agreement, to the extent relating to such Trust, and the applicable Trust
Supplement, or modifying the rights of the Certificateholders, except that no
such supplemental trust agreement may, without the consent of each
Certificateholder so affected thereby,
- reduce in any manner the amount of, or delay the timing of, any receipt by
the Trustee of payments on the Equipment Notes held in such Trust or
distributions in respect of any Certificate related to such Trust, or
change the date or place of any payment in respect of any Certificate, or
make distributions payable in coin or currency other than that provided
for in such Certificates, or impair the right of any Certificateholder of
such Trust to institute suit for the enforcement of any such payment when
due,
- permit the disposition of any Equipment Note held in such Trust, except as
provided in the Basic Agreement or the applicable Trust Supplement, or
otherwise deprive any Certificateholder of the benefit of the ownership of
the applicable Equipment Notes,
- reduce the percentage of the aggregate fractional undivided interests of
the Trust provided for in the Basic Agreement or the applicable Trust
Supplement, the consent of the holders of which is required for any such
supplemental trust agreement or for any waiver provided for in the Basic
Agreement or such Trust Supplement,
- modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of events of default or
receipt of payment or
- cause the Trust to become taxable as an "association" within the meaning
of Treasury Regulation Section 301.7701-2 or a "publicly traded
partnership" within the meaning of Section 7704 of the Code taxable as a
corporation.
MODIFICATION OF INDENTURE AND RELATED AGREEMENTS
The prospectus supplement will specify the Trustee's obligations in the
event that the Trustee, as the holder of any Equipment Notes held in a Trust,
receives a request for its consent to any amendment, modification or waiver
under the Indenture or other documents relating to such Equipment Notes
(including any Lease with respect to Leased Aircraft Notes or any Liquidity
Facility).
CROSS-SUBORDINATION ISSUES
The Equipment Notes issued under an Indenture may be held in more than one
Trust and one Trust may hold Equipment Notes issued under more than one Related
Indenture. Unless otherwise provided in a prospectus supplement, only Equipment
Notes of the same class or series may be held in the same Trust. In such event,
payments made on account of a subordinate class or series of Equipment Notes
issued under a Related Indenture may, under circumstances described in the
related prospectus supplement, be subordinated to the prior payment of all
amounts owing to Certificateholders of a Trust which holds senior Equipment
Notes issued under all Related Indentures. The prospectus supplement related to
an issuance of Certificates will describe any such "cross-subordination"
provisions and any
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related terms, including the percentage of Certificateholders under any Trust
which are permitted to (i) grant waivers of defaults under any Related
Indenture, (ii) consent to the amendment or modification of any Related
Indentures or (iii) direct the exercise of remedial actions under any Related
Indentures.
TERMINATION OF THE TRUSTS
The obligations of Northwest, NWA Corp. and the Trustee with respect to a
Trust will terminate upon the distribution to Certificateholders of such Trust
of all amounts required to be distributed to them pursuant to the Basic
Agreement and the applicable Trust Supplement and the disposition of all
property held in such Trust. The Trustee will send to each Certificateholder of
record of such Trust notice of the termination of such Trust, the amount of the
proposed final payment and the proposed date for the distribution of such final
payment for such Trust. The final distribution to any Certificateholder of such
Trust will be made only upon surrender of such Certificateholder's Certificates
at the office or agency of the Trustee specified in such notice of termination.
DELAYED PURCHASE
In the event that, on the delivery date of any Certificates, all of the
proceeds from the sale of such Certificates are not used to purchase the
Equipment Notes contemplated to be held in the related Trust, such Equipment
Notes may be purchased by the Trustee at any time on or prior to a subsequent
date specified in the applicable prospectus supplement. In such event, the
proceeds from the sale of such Certificates not used to purchase Equipment Notes
will be held under an arrangement described in the applicable prospectus
supplement pending the purchase of the Equipment Notes not so purchased. If any
such proceeds are not subsequently used to purchase Equipment Notes by the date
specified in the prospectus supplement, such proceeds will be returned to the
holders of such Certificates.
THE PARENT GUARANTY
NWA Corp. will unconditionally guarantee (i) with respect to related Owned
Aircraft Notes, the full and prompt payment of principal, premium, if any, and
interest thereon when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise, and (ii) with respect to related Leased
Aircraft Notes, the full and prompt payment of all amounts payable by Northwest
under the related Lease when and as the same shall become due and payable.
The Parent Guaranty will be enforceable without any need first to enforce
any Owned Aircraft Note or Lease against Northwest. The Parent Guaranty will be
an unsecured obligation of NWA Corp.
LIQUIDITY FACILITY
The related prospectus supplement may provide that one or more payments of
interest on the Certificates of one or more series or classes will be supported
by a Liquidity Facility issued by an institution identified in the related
prospectus supplement. The provider of such Liquidity Facility will have a claim
senior to the Certificateholders' as specified in the related prospectus
supplement.
THE TRUSTEE
The Trustee for each series or class of Certificates will be identified in
the prospectus supplement. With certain exceptions, the Trustee will make no
representations as to the validity or sufficiency of the Basic Agreement, the
Trust Supplements, the Certificates, the Equipment Notes, the Indentures, the
Leases or other related documents. With respect to any series or class of
Certificates, the Trustee shall not be liable for any action taken or omitted to
be taken by it in good faith in accordance with the direction of the holders of
a majority in principal amount of outstanding Certificates of such series or
class. Subject to such provisions, such Trustee shall be under no obligation to
exercise any of its rights
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or powers under the Basic Agreement at the request of any holders of
Certificates issued thereunder unless they shall have offered to the Trustee
indemnity satisfactory to it. The Basic Agreement provides that the Indenture
Trustee in its individual or any other capacity may acquire and hold
Certificates issued thereunder and, subject to certain conditions, may otherwise
deal with Northwest, NWA Corp. and, with respect to the Leased Aircraft, with
any Owner Trustee and Owner Participant with the same rights it would have if it
were not the Trustee.
The Trustee may resign with respect to any or all of the Trusts at any time,
in which event Northwest will be obligated to appoint a successor trustee. If
the Trustee
- ceases to be eligible to continue as Trustee with respect to a Trust or
- becomes incapable of acting as Trustee or
- becomes insolvent,
Northwest may remove such Trustee, or any Certificateholder of such Trust
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of such
Trustee and the appointment of a successor trustee. Any resignation or removal
of the Trustee with respect to a Trust and appointment of a successor trustee
for such Trust will not become effective until acceptance of the appointment by
the successor trustee. Pursuant to such resignation and successor trustee
provisions, it is possible that a different trustee could be appointed to act as
the successor trustee with respect to each Trust. All references in this
prospectus to the Trustee should be read to take into account the possibility
that the Trusts could have different successor trustees in the event of such a
resignation or removal.
The Basic Agreement provides that Northwest will pay the Trustee's fees and
expenses and indemnify the Trustee against certain liabilities.
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DESCRIPTION OF THE EQUIPMENT NOTES
The statements made under this caption are summaries and reference is made
to the entire prospectus and detailed information appearing in the applicable
prospectus supplement. Where no distinction is made between the Leased Aircraft
Notes and the Owned Aircraft Notes or between their respective Indentures, such
statements refer to any Equipment Notes and any Indenture.
TO THE EXTENT THAT ANY PROVISION IN ANY PROSPECTUS SUPPLEMENT IS
INCONSISTENT WITH ANY PROVISION IN THIS SUMMARY, THE PROVISION OF SUCH
PROSPECTUS SUPPLEMENT WILL CONTROL.
GENERAL
All Equipment Notes will be issued under a separate Indenture either (a)
between the related Owner Trustee of a trust for the benefit of the Owner
Participant who is the beneficial owner of the related Aircraft, and the related
Loan Trustee, or (b) between Northwest and the related Loan Trustee. The
Equipment Notes issued pursuant to clause (a) of the preceding sentence will be
nonrecourse obligations of the applicable Owner Trust. Each Equipment Note will
be authenticated under an Indenture by the Loan Trustee. All Equipment Notes
issued under the same Indenture will relate to, and be secured by, one or more
Aircraft identified and described in the related prospectus supplement and
which, in the case of Equipment Notes issued as described in such clause (a),
are leased to Northwest pursuant to a Lease between the Owner Trustee under the
applicable Owner Trust and Northwest or, in the case of Equipment Notes issued
as described in clause (b), owned by Northwest.
With respect to each Leased Aircraft, the related Owner Trustee has acquired
or will acquire such Aircraft from Northwest or the manufacturer of such
Aircraft, as the case may be, has granted or will grant a security interest in
such Aircraft to the related Loan Trustee as security for the payments of the
related Leased Aircraft Notes, and has leased or will lease such Aircraft to
Northwest pursuant to the related Lease which has been or will be assigned to
the related Loan Trustee. Pursuant to each such Lease, Northwest will be
obligated to make or cause to be made rental and other payments to the related
Loan Trustee on behalf of the related Owner Trustee in amounts that will be
sufficient to make payments of the principal, interest and premium, if any,
required to be made in respect of such Leased Aircraft Notes when and as due and
payable.
The rental obligations of Northwest under each Lease and the obligations of
Northwest under each Owned Aircraft Indenture and under the Owned Aircraft Notes
will be general obligations of Northwest. Except in certain circumstances
involving Northwest's purchase of a Leased Aircraft and the assumption of the
Leased Aircraft Notes related thereto, the Leased Aircraft Notes are not
obligations of, or guaranteed by, Northwest.
PRINCIPAL AND INTEREST PAYMENTS
Interest received by the Trustee on the Equipment Notes held in each Trust
will be passed through to the Certificateholders of such Trust on the dates and
at the rate per annum set forth in the applicable prospectus supplement until
the final distribution for such Trust. Principal received by the Trustee on the
Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust in scheduled amounts on the dates set forth in
the applicable prospectus supplement until the final distribution date for such
Trust.
If any date scheduled for any payment of principal, premium, if any, or
interest with respect to the Equipment Notes is not a Business Day, such payment
will be made on the next succeeding Business Day without any additional
interest.
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REDEMPTION
The applicable prospectus supplement will describe the circumstances,
whether voluntary or involuntary, under which the Equipment Notes may be
redeemed or purchased prior to the stated maturity date thereof, in whole or in
part, the premium, if any, applicable upon certain redemptions or purchases and
other terms applying to the redemptions or purchases of such Equipment Notes.
SECURITY
The Leased Aircraft Notes will be secured by
- an assignment by the related Owner Trustee to the related Loan Trustee of
such Owner Trustee's rights (except for certain rights, including those
described below) under the Lease or Leases with respect to the related
Aircraft, including the right to receive payments of rent thereunder,
- a mortgage granted to such Loan Trustee in such Aircraft, subject to the
rights of Northwest under such Lease or Leases, and
- an assignment to such Loan Trustee of certain of such Owner Trustee's
rights with respect to such Aircraft under the purchase agreement between
Northwest and the related manufacturer.
Under the terms of each Lease, Northwest's obligations in respect of each
Leased Aircraft will be those of a lessee under a "net lease." Accordingly,
Northwest will be obligated, among other things and at its expense, to cause
each Leased Aircraft to be duly registered, to pay all costs of operating such
Aircraft and to maintain, service, repair and overhaul (or cause to be
maintained, serviced, repaired and overhauled) such Aircraft. With respect to
the Leased Aircraft, the assignment by the related Owner Trustee to the related
Loan Trustee of its rights under the related Lease will exclude, among other
things, rights of such Owner Trustee and the related Owner Participant relating
to indemnification by Northwest for certain matters, insurance proceeds payable
to such Owner Trustee in its individual capacity and to such Owner Participant
under liability insurance maintained by Northwest pursuant to such Lease or by
such Owner Trustee or such Owner Participant, insurance proceeds payable to such
Owner Trustee in its individual capacity or to such Owner Participant under
certain casualty insurance maintained by such Owner Trustee or such Owner
Participant pursuant to such Lease and any rights of such Owner Participant or
such Owner Trustee to enforce payment of the foregoing amounts and their
respective rights to the proceeds of the foregoing.
The Owned Aircraft Notes will be secured by
- a mortgage granted to the related Loan Trustee of all of Northwest's
right, title and interest in and to such Owned Aircraft, and
- if so provided in the related prospectus supplement, an assignment to such
Loan Trustee of certain of Northwest's rights with respect to such
Aircraft under the purchase agreement between Northwest and the related
manufacturer.
Under the terms of each Owned Aircraft Indenture, Northwest will be
obligated, among other things and at its expense, to cause each Owned Aircraft
to be duly registered, to pay all costs of operating such Aircraft and to
maintain, service, repair and overhaul (or cause to be maintained, serviced,
repaired and overhauled) such Aircraft.
The prospectus supplement will specify the required insurance coverage with
respect to the Aircraft.
Northwest will be required, except under certain circumstances, to keep each
Aircraft registered under the Federal Aviation Act of 1958, as amended (the
"Federal Aviation Act"), and to record the Indenture and the Lease, if
applicable, among other documents, with respect to each Aircraft under the
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Federal Aviation Act. Such recordation of the Indenture, the Lease, if
applicable, and other documents with respect to each Aircraft will give the
related Loan Trustee a perfected security interest in the related Aircraft
whenever it is located in the United States or any of its territories and
possessions; the Convention on the International Recognition of Rights in
Aircraft (the "Convention") provides that such security will also be recognized,
with certain limited exceptions, in those jurisdictions that have ratified or
adhere to the Convention. Northwest will have the right, subject to certain
conditions, at its own expense to register each Aircraft in countries other than
the United States. Each Aircraft may also be operated by Northwest or under
lease, sublease or interchange arrangements in countries that are not parties to
the Convention. The extent to which the related Loan Trustee's security interest
would be recognized in an Aircraft located in a country that is not a party to
the Convention, and the extent to which such security interest would be
recognized in a jurisdiction adhering to the Convention if the Aircraft is
registered in a jurisdiction not a party to the Convention, is uncertain.
Moreover, in the case of an Indenture Default, the ability of the related Loan
Trustee to realize upon its security interest in an Aircraft could be adversely
affected as a legal or practical matter if such Aircraft were registered or
located outside the United States.
Unless otherwise specified in the applicable prospectus supplement, the
Equipment Notes will not be cross-collateralized and consequently the Equipment
Notes issued in respect of any one Aircraft will not be secured by any other
Aircraft or, in the case of Leased Aircraft Notes, the Lease related thereto.
Unless and until an Indenture Default with respect to a Leased Aircraft has
occurred and is continuing, the related Loan Trustee may exercise only limited
rights of the related Owner Trustee under the related Lease.
Funds, if any, held from time to time by the Loan Trustee with respect to
any Aircraft, prior to the distribution thereof, will be invested and reinvested
by such Loan Trustee. Such investment and reinvestment will be at the direction
of Northwest (except, with respect to a Leased Aircraft, in the case of a Lease
Event of Default under the applicable Lease or, with respect to an Owned
Aircraft, in the case of an Indenture Default under the applicable Indenture),
in certain investments described in the Related Indenture. The net amount of any
loss resulting from any such investments will be paid by Northwest.
Section 1110 of the Bankruptcy Code provides that the right of lessors,
conditional vendors and holders of security interests with respect to
"equipment" (as defined in Section 1110 of the Bankruptcy Code) to take
possession of such equipment in compliance with the provisions of a lease,
conditional sale contract or security agreement, as the case may be, is not
affected after 60 days after the filing of a petition under Chapter 11 of the
Bankruptcy Code by (a) the automatic stay provision of the Bankruptcy Code,
which provision enjoins creditors' remedies except with the court's approval,
(b) the provision of the Bankruptcy Code allowing the trustee in reorganization
to use property of the debtor during the reorganization period, (c) Section 1129
of the Bankruptcy Code (which governs the confirmation of plans of
reorganization in Chapter 11 cases) and (d) any power of the bankruptcy court to
enjoin a repossession. Section 1110 provides that the right to take possession
of an aircraft may not be exercised for 60 days following the date of
commencement of the reorganization proceedings and may not be exercised at all
after such 60-day period (or such longer period consented to by the lessor,
conditional vendor or holder of a security interest), if the trustee in
reorganization agrees to perform the debtor's obligations that become due on or
after such date and cures all existing defaults (other than defaults resulting
solely from the financial condition, bankruptcy, insolvency or reorganization of
the debtor, the appointment of a trustee or custodian or the failure to satisfy
any penalty rate or provision relating to a default arising from any failure by
the debtor to perform nonmonetary obligations under the applicable agreement).
"Equipment" is defined in Section 1110 of the Bankruptcy Code, in part, as "an
aircraft, aircraft engine, propeller, appliance, or spare part (as defined in
section 40102 of title 49) that is subject to a security interest granted by,
leased to or conditionally sold to a debtor that is a citizen of the United
States (as defined in section 40102 of title 49) holding an air
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carrier operating certificate issued by the Secretary of Transportation pursuant
to chapter 47 of title 49 for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo."
Section 1110 does not prevent the trustee or debtor-in-possession from
rejecting a lease (including any Lease) or demanding a renegotiation of such
lease as a condition to not rejecting such lease. In addition, if more than one
aircraft are leased pursuant to a master lease and accompanying lease
supplement, the applicability of Section 1110 would be determined on an
aircraft-by-aircraft basis. Assuming Section 1110 is applicable to all aircraft
subject to a master lease, Section 1110 does not prevent the trustee or
debtor-in-possession from complying with the provisions of Section 1110 with
respect to some lease supplements, and thereby retaining possession of the
related aircraft, and not complying with the provisions of Section 1110 with
respect to other lease supplements, and thereby enabling a repossession of other
aircraft.
In connection with any issuance of Certificates under this prospectus and
the applicable prospectus supplement, Northwest shall have received an opinion
from its counsel to the effect that (i) with respect to any Leased Aircraft, the
related Owner Trustee, as lessor under the related Lease, and the related Loan
Trustee, as assignee of such Owner Trustee's rights under such Lease pursuant to
the Related Indenture, would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to the Aircraft initially delivered under such
Lease and subjected to the Related Indenture or (ii) with respect to any Owned
Aircraft, the related Loan Trustee under the Related Indenture would be entitled
to the benefits of Section 1110 of the Bankruptcy Code with respect to the
Aircraft initially subjected to the Related Indenture. Such opinions will not
address the possible replacement of an Aircraft after an Event of Loss (as
defined in the Indenture) in the future.
RANKING OF EQUIPMENT NOTES
Some of the Equipment Notes related to one or more Aircraft, as described in
the related prospectus supplement, may be subordinated and junior in right of
payment to other Equipment Notes related to the same Aircraft. The terms of such
subordination, if any, will be described in the related prospectus supplement.
PAYMENTS AND LIMITATION OF LIABILITY
Each Leased Aircraft will be leased by the related Owner Trustee to
Northwest for a term commencing on the delivery date thereof to such Owner
Trustee and expiring on a date not earlier than the latest maturity date of the
related Leased Aircraft Notes, unless previously terminated as permitted by the
terms of the related Lease. The basic rent and other payments under each such
Lease will be payable by Northwest in accordance with the terms specified in the
applicable prospectus supplement, and will be assigned by the related Owner
Trustee under the Related Indenture to the Loan Trustee to provide the funds
necessary to pay principal of, premium, if any, and interest due from such Owner
Trustee on the Leased Aircraft Notes issued under such Indenture. In certain
cases, the basic rent payments under a Lease may be adjusted, but each Lease
will provide that under no circumstances will rent payments by Northwest be less
than the scheduled payments on the related Leased Aircraft Notes. The balance of
any basic rent payment under each Lease, after payment of amounts due on the
Leased Aircraft Notes issued under the Indenture corresponding to such Lease,
will be paid over to the applicable Owner Participant. Northwest's obligation to
pay rent and to cause other payments to be made under each Lease will be general
obligations of Northwest.
With respect to the Leased Aircraft Notes, except in certain circumstances
involving Northwest's purchase of a Leased Aircraft and the assumption of the
Leased Aircraft Notes related thereto, the Leased Aircraft Notes will not be
obligations of, or guaranteed by, Northwest or any of its affiliates. With
respect to the Leased Aircraft Notes, none of the Owner Trustees, the Owner
Participants or the Loan Trustees shall be personally liable to any holder of
such Leased Aircraft Notes for amounts
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payable under such Leased Aircraft Notes, or, except as provided in the
Indentures relating thereto in the case of the Owner Trustees and the Loan
Trustees, for any liability under such Indentures. Except in the circumstances
referred to above, all amounts payable under any Leased Aircraft Notes (other
than payments made in connection with an optional redemption or purchase by the
related Owner Trustee or the related Owner Participant) will be made only from
(i) the assets subject to the lien of the Related Indenture with respect to such
Aircraft or the income and proceeds received by the related Loan Trustee
therefrom (including rent payable by Northwest under the related Lease) or (ii)
if so provided in the related prospectus supplement, the applicable Liquidity
Facility.
With respect to the Leased Aircraft Notes, except as otherwise provided in
the Related Indentures, no Owner Trustee shall be personally liable for any
amount payable or for any statements, representations, warranties, agreements or
obligations under such Indentures or under such Leased Aircraft Notes except for
its own willful misconduct or gross negligence. None of the Owner Participants
shall have any duty or responsibility under the Leased Aircraft Indentures or
under such Leased Aircraft Notes to the related Loan Trustee or to any holder of
any such Leased Aircraft Note.
Northwest's obligations under each Owned Aircraft Indenture and under the
Owned Aircraft Notes will be general obligations of Northwest.
DEFEASANCE OF THE INDENTURES AND THE EQUIPMENT NOTES IN CERTAIN CIRCUMSTANCES
Unless otherwise specified in the applicable prospectus supplement, the
applicable Indenture provides that the obligations of the related Loan Trustee
and, with respect to any Leased Aircraft Notes, the related Owner Trustee or,
with respect to any Owned Aircraft Notes, Northwest under the applicable
Indenture shall be deemed to have been discharged and paid in full (except for
certain obligations, including the obligations to register the transfer or
exchange of Equipment Notes, to replace stolen, lost, destroyed or mutilated
Equipment Notes and to maintain paying agencies and hold money for payment in
trust) on the 91st day after the date of irrevocable deposit with the related
Loan Trustee of money or certain obligations of the United States or any agency
or instrumentality thereof the payment of which is backed by the full faith and
credit of the United States which, through the payment of principal and interest
in respect thereof in accordance with their terms, will provide money in an
aggregate amount sufficient to pay when due (including as a consequence of
redemption in respect of which notice is given on or prior to the date of such
deposit) principal of, premium, if any, and interest on all Equipment Notes
issued thereunder in accordance with the terms of such Indenture. Such discharge
may occur only if, among other things, there has been published by the Internal
Revenue Service a ruling to the effect that holders of such Equipment Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit, defeasance and discharge and will be subject to federal income
tax on the same amount and in the same manner and at the same time as would have
been the case if such deposit, defeasance and discharge had not occurred.
Upon such defeasance, or upon payment in full of the principal of, premium,
if any, and interest on all Equipment Notes issued under any Indenture on the
maturity date therefor or deposit with the applicable Loan Trustee of money
sufficient therefor no earlier than one year prior to the date of such maturity,
the holders of such Equipment Notes will have no beneficial interest in or other
rights with respect to the related Aircraft or other assets subject to the lien
of such Indenture and such lien shall terminate.
ASSUMPTION OF LEASE OBLIGATIONS BY NORTHWEST
Unless otherwise specified in the applicable prospectus supplement with
respect to Leased Aircraft, upon the exercise by Northwest of any purchase
options it may have under the related Lease prior to the end of the term of such
Lease, Northwest may assume on a full recourse basis all of the obligations of
the Owner Trustee (other than its obligations in its individual capacity) under
the
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Indenture with respect to such Aircraft, including the obligations to make
payments in respect of the related Leased Aircraft Notes. In such event, certain
relevant provisions of the related Lease, including (among others) provisions
relating to maintenance, possession and use of the related Aircraft, liens,
insurance and events of default will be incorporated into such Indenture, and
the Leased Aircraft Notes issued under such Indenture will not be redeemed and
will continue to be secured by such Aircraft.
LIQUIDITY FACILITY
The related prospectus supplement may provide that one or more payments of
interest on the related Equipment Notes of one or more series or classes or
distributions made by the Trustee of the related Trust will be supported by a
Liquidity Facility issued by an institution identified in the related prospectus
supplement. Unless otherwise provided in the related prospectus supplement, the
provider of the Liquidity Facility will have a senior claim upon the assets
securing the Equipment Notes.
INTERCREDITOR ISSUES
Equipment Notes may be issued in different classes or series, which means
that the Equipment Notes may have different payment priorities even though they
are issued by the same Owner Trustee and relate to the same Aircraft. In such
event, the related prospectus supplement will describe the priority of
distributions among such Equipment Notes (and any Liquidity Facilities
therefor), the ability of any class or series to exercise and/or enforce any or
all remedies with respect to the related Aircraft (and, if the Equipment Notes
are Leased Aircraft Notes, the Lease related thereto) and certain other
intercreditor terms and provisions.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion represents the opinion of Cadwalader, Wickersham &
Taft as to the principal U.S. federal income tax consequences to
Certificateholders of the purchase, ownership and disposition of the
Certificates. Except as otherwise specified, the discussion is addressed to
beneficial owners of Certificates ("U.S. Certificateholders") that are citizens
or residents of the United States, corporations, partnerships or other entities
created or organized in or under the laws of the United States or any State,
estates the income of which is subject to U.S. federal income taxation
regardless of its source or, generally, trusts if a court within the United
States is able to exercise primary supervision over the administration of such
trust, and one or more of the foregoing persons have the authority to control
all substantial decisions of such trust ("U.S. Persons") that will hold the
Certificates as capital assets. This discussion does not address the tax
treatment of U.S. Certificateholders that may be subject to special tax rules,
such as banks, insurance companies, dealers in securities or commodities,
tax-exempt entities, holders that will hold Certificates as part of a straddle
or holders that have a "functional currency" other than the U.S. Dollar, nor
does it address the tax treatment of U.S. Certificateholders that do not acquire
Certificates as part of the initial offering. This discussion does not describe
any tax consequences arising under the laws of any State, locality or taxing
jurisdiction other than the United States.
This discussion is based upon the tax laws of the United States as in effect
on the date of this prospectus, as well as judicial and administrative
interpretations thereof (in final or proposed form) available on or before such
date. All of the foregoing are subject to change or differing interpretations,
which could apply retroactively. Prospective investors should note that no
rulings have been or will be sought from the Internal Revenue Service (the
"IRS") with respect to any of the federal income tax consequences discussed
below, and no assurance can be given the IRS will not take contrary positions.
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PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF THE CERTIFICATES.
TAX STATUS OF THE TRUSTS
In the opinion of Cadwalader, Wickersham & Taft, special counsel to
Northwest, each Trust will not be classified as an association or a publicly
traded partnership taxable as a corporation for U.S. federal income tax purposes
and will not be subject to federal income tax. Each Trust will file federal
income tax returns and report to investors on the basis that it is a grantor
trust under Subpart E, Part I of Subchapter J of the Code. If a Trust were
treated as a partnership for U.S. federal income tax purposes rather than as a
grantor trust, in the opinion of Cadwalader, Wickersham & Taft, the consequences
to U.S. Certificateholders and, to the extent described below, Non-U.S.
Certificateholders, would not be materially different. The remainder of this
discussion describes the consequences of the treatment as a grantor trust.
Certificateholders who are not U.S. Persons should consult their own tax
advisors as to the suitability to them of an investment in the Certificates.
TAXATION OF CERTIFICATEHOLDERS GENERALLY
A U.S. Certificateholder will be treated as owning its pro rata undivided
interest in each of the Equipment Notes and any other property held by the
related Trust. Accordingly, each U.S. Certificateholder's share of interest paid
on the Equipment Notes will be taxable as ordinary income, as it is paid or
accrued, in accordance with such owner's method of accounting for U.S. federal
income tax purposes and a U.S. Certificateholder's share of premium, if any,
paid on the Equipment Notes will be treated as capital gain. Any amounts
received by a Trust from Interest Drawings under the relevant Liquidity Facility
will be treated for U.S. federal income tax purposes as having the same
characteristics as the payments they replace.
Each U.S. Certificateholder will be entitled to deduct, consistent with its
method of accounting, its pro rata share of fees and expenses paid or incurred
by the corresponding Trust as provided in Section 162 or 212 of the Code.
Certain fees and expenses, including fees paid to the Trustee and the Liquidity
Provider, will be borne by parties other than the Certificateholders. It is
possible that such fees and expenses will be treated as constructively received
by the Trust, in which event a U.S. Certificateholder will be required to
include in income and will be entitled to deduct its pro rata share of such fees
and expenses. If a U.S. Certificateholder is an individual, estate or trust, the
deduction for such holder's share of such fees or expenses will be allowed only
to the extent that all of such holder's miscellaneous itemized deductions,
including such holder's share of such fees and expenses, exceed 2% of such
holder's adjusted gross income. In addition, in the case of U.S.
Certificateholders who are individuals, certain otherwise allowable itemized
deductions will be subject generally to additional limitations on itemized
deductions under the applicable provisions of the Code.
EFFECT OF SUBORDINATION OF SUBORDINATED CERTIFICATEHOLDERS
If any Trust with respect to a series or class are subordinated with respect
to other Trusts of the same series or class (such Trusts being the "Subordinated
Trusts" and the related Certificates being the "Subordinated Certificates")
receives less than the full amount of the receipts of principal or interest paid
with respect to the Equipment Notes held by it (any shortfall in such receipts
being the "Shortfall Amounts") because of the subordination of the Equipment
Notes held by such Trust under the Intercreditor Agreement, the corresponding
owners of beneficial interests in the Subordinated Certificates (the
"Subordinated Certificateholders") would probably be treated for federal income
tax purposes as if they had (1) received as distributions their full share of
such receipts, (2) paid over to the relevant preferred class of
Certificateholders an amount equal to their share of such Shortfall Amount, and
(3) retained the right to reimbursement of such amounts to the extent of future
amounts payable to such Subordinated Certificateholders with respect to such
Shortfall Amount.
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Under this analysis, (1) Subordinated Certificateholders incurring a
Shortfall Amount would be required to include as current income any interest or
other income of the corresponding Subordinated Trust that was a component of the
Shortfall Amount, even though such amount was in fact paid to the relevant
preferred class of Certificateholders, (2) a loss would only be allowed to such
Subordinated Certificateholders when their right to receive reimbursement of
such Shortfall Amount became worthless (i.e., when it becomes clear that funds
will not be available from any source to reimburse such loss), and (3)
reimbursement of such Shortfall Amount prior to such a claim of worthlessness
would not be taxable income to Subordinated Certificateholders because such
amount was previously included in income. These results should not significantly
affect the inclusion of income for Subordinated Certificateholders on the
accrual method of accounting, but could accelerate inclusion of income to
Subordinated Certificateholders on the cash method of accounting by, in effect,
placing them on the accrual method.
ORIGINAL ISSUE DISCOUNT
The Equipment Notes may be issued with original issue discount ("OID"),
which may require U.S. Certificateholders to include such OID in gross income in
advance of the receipt or accrual of the stated interest on such Equipment
Notes. The prospectus supplement will state whether any Equipment Notes to be
held by the related Trust will be issued with OID. Generally, a holder of a debt
instrument issued with original issue discount that is not DE MINIMIS must
include such original issue discount in income for federal income tax purposes
as it accrues, in advance of the receipt of the cash attributable to such
income, under a method that takes into account the compounding of interest.
MARKET DISCOUNT
Generally, the term "market discount" means the excess of the remaining
principal amount of a Certificate over the holder's tax basis in such
Certificate immediately after its acquisition, subject to a DE MINIMIS
exception.
A holder who acquires a Certificate at a market discount will be required to
treat any gain realized on the disposition of such Certificate, except in
certain nonrecognition transactions, as ordinary income to the extent of the
market discount that accrued during the period that such holder held such
Certificate. Further, a disposition of a Certificate by gift (and in certain
other circumstances) could result in the recognition of market discount income,
computed as if such Certificate had been sold for its fair market value.
In the case of a partial principal payment on indebtedness subject to the
market discount rules, Section 1276 of the Code requires that such payment be
included in gross income as ordinary income to the extent such payment does not
exceed the market discount that has accrued during the period such indebtedness
was held. The amount of any accrued market discount later required to be
included in income upon a disposition, or subsequent partial principal payment,
will be reduced by the amount of accrued market discount previously included in
income.
Until Treasury regulations are issued, the explanatory Conference Committee
Report to the Tax Reform Act of 1986 (the "Conference Report") indicates that
holders of installment obligations (such as the Equipment Notes) with market
discount may elect to accrue market discount either (i) on the basis of a
constant interest rate or (ii) in the ratio to the total amount of remaining
market discount that the amount of stated interest paid in the accrual period
bears to the total amount of stated interest remaining to be paid on the
installment obligation as of the beginning of such period. Under Section 1277 of
the Code, if in any taxable year interest paid or accrued on indebtedness
incurred or continued to purchase or carry indebtedness subject to the market
discount rules exceeds the interest currently includable in income with respect
to such indebtedness, deduction of the excess interest must be deferred to the
extent of the market discount allocable to the taxable year. The deferred
portion of
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<PAGE>
any interest expense will generally be deductible when such market discount is
included in income upon the sale or other disposition (including repayment) of
the indebtedness.
A holder of a Certificate acquired at a market discount may elect under
Section 1278 of the Code, in the manner provided by Revenue Procedure 92-67,
1992-34 I.R.B. 6, to include such discount in income as it accrues. The current
inclusion election applies to all market discount obligations acquired on or
after the first day to which the election applies, and may not be revoked
without the consent of the IRS. If a holder of a Certificate elects to include
market discount in income as it accrues, the foregoing rules of Section 1276 and
1277 of the Code with respect to the recognition of ordinary income on a sale or
other disposition of such Certificate and the deferral of interest deductions on
indebtedness related to such Certificate would not apply.
The IRS is authorized to issue regulations to implement the market discount
provisions of the Code. No such regulations have been issued or proposed. It is
impossible to anticipate what effect, if any, such regulations could have on the
Certificateholders.
AMORTIZABLE BOND PREMIUM
A U.S. Certificateholder should generally be considered to have acquired an
interest in an Equipment Note at a premium to the extent the purchaser's tax
basis allocable to such interest exceeds the remaining principal amount of the
Equipment Note allocable to such interest. In that event, a U.S.
Certificateholder who holds a Certificate as a capital asset may elect to
amortize that premium as an offset to interest income under Section 171 of the
Code with corresponding reductions in the U.S. Certificateholder's tax basis in
its Certificate. In the case of installment obligations (such as the Equipment
Notes), the Conference Report indicates a Congressional intent that amortization
will be in accordance with the same rules that will apply to the accrual of
market discount on installment obligations (see discussion above).
Under certain circumstances, amortizable bond premium may be determined by
reference to any early call date. It is unclear how the amortizable bond premium
rules apply where, as in the case with the Equipment Notes, the amount of
redemption premium payable on an early call date is unknown. In addition, the
treatment of any unamortized bond premium remaining at the time of an early call
is unclear. The U.S. Certificateholders are urged to consult their own tax
advisors as to the treatment of any amortizable bond premiums.
SALE OR OTHER DISPOSITION OF THE CERTIFICATES
Upon the sale, exchange or other disposition of a Certificate, a U.S.
Certificateholder generally will recognize capital gain or loss equal to the
difference between the amount realized on the disposition (other than any amount
attributable to accrued interest which will be taxable as ordinary income) and
the U.S. Certificateholder's adjusted tax basis in the related Equipment Notes
and any other assets held by the corresponding Trust. A U.S. Certificateholder's
adjusted tax basis will equal the holder's cost for its Certificate, plus any
accrued OID or market discount previously included in income or less any
amortized bond premium or any previously recognized losses or prior principal
payments. Any gain or loss generally will be capital gain or loss (other than
accrued market discount not previously included in income) if the Certificate
was held as a capital asset.
FOREIGN CERTIFICATEHOLDERS
Subject to the discussion of backup withholding below, payments of principal
and interest (including OID) on the Equipment Notes to, or on behalf of, any
beneficial owner of a Certificate that is not a U.S. Person (a "Non-U.S.
Certificateholder") will not be subject to U.S. federal withholding tax;
PROVIDED, in the case of interest, that (i) such Non-U.S. Certificateholder does
not actually or constructively own 10% or more of the total combined voting
power of all classes of the stock of any
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Owner Participant (in the case of Leased Aircraft Notes) or of Northwest (in the
case of Owned Aircraft Notes), (ii) such Non-U.S. Certificateholder is not a
controlled foreign corporation for U.S. tax purposes that is related to an Owner
Participant (in the case of Leased Aircraft Notes) or of Northwest (in the case
of Owned Aircraft Notes), and (iii) either (A) the Non-U.S. Certificateholder
certifies, under penalties of perjury, that it is not a U.S. Person and provides
its name and address or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "financial institution") and holds the Certificate
certifies, under penalties of perjury, that such statement has been received
from the Non-U.S. Certificateholder by it or by another financial institution
and furnishes the payor with a copy thereof.
Any capital gain realized upon the sale, exchange, retirement or other
disposition of a Certificate or upon receipt of premium paid on an Equipment
Note by a Non-U.S. Certificateholder will not be subject to U.S. federal income
or withholding taxes if (i) such gain is not effectively connected with a U.S.
trade or business of the holder and (ii) in the case of an individual, such
holder is not present in the United States for 183 days or more in the taxable
year of the sale, exchange, retirement or other disposition or receipt.
Any interest or gain described in the two preceding paragraphs will be
subject to regular U.S. federal income tax at graduated rates if it is
effectively connected with the conduct of a U.S. trade or business by a non-U.S.
Certificateholder.
BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments within the United States of principal, interest, OID and premium on the
Certificates, and to payments of the proceeds of certain sales of Certificates
made to U.S. Certificateholders other than certain exempt recipients (such as
corporations). A 31% "backup withholding" tax may apply to such payments if the
holder fails or has failed to provide an accurate taxpayer identification number
or otherwise establish an exemption or fails to report in full interest income.
With respect to Non-U.S. Certificateholders, payments made on a Certificate and
proceeds from the sale of a Certificate owned by a Non-U.S. Certificateholder
will generally not be subject to such information reporting requirements or
backup withholding tax if such Non-U.S. Certificateholder provides the
applicable statement as to its non-U.S. status or otherwise establishes an
exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be allowed as a refund or credit against such
holder's U.S. federal income tax liability, if any, provided the required
information is furnished to the IRS.
The Treasury Department recently issued final Treasury Regulations (the
"FINAL REGULATIONS") governing withholding, backup withholding and information
reporting requirements. The Final Regulations do not significantly alter the
substantive withholding and information reporting requirements discussed herein;
they unify current certification procedures and forms and clarify reliance
standards. The Final Regulations will generally become effective for payments
made after December 31, 2000.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable prospectus supplement, the
Certificates may, subject to certain legal restrictions, be purchased and held
by an employee benefit plan (a "Plan") subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual
retirement account or an employee benefit plan subject to section 4975 of the
Code. A fiduciary of a Plan must determine that the purchase and holding of a
Certificate is consistent with its fiduciary duties under ERISA and does not
result in a non-exempt prohibited transaction as defined in section 406 of ERISA
or section 4975 of the Code. Employee benefit plans which are governmental
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plans (as defined in section 3(32) of ERISA) and certain church plans (as
defined in section 3(33) of ERISA) are not subject to Title I of ERISA or
section 4975 of the Code. The Certificates may, subject to certain legal
restrictions, be purchased and held by such plans.
PLAN OF DISTRIBUTION
Northwest may sell Securities (a) through underwriters, (b) directly to
investors or other persons or (c) through dealers or agents. The applicable
prospectus supplement will name any underwriter, dealer or agent involved in the
offer and sale of the Certificates.
The Certificates may be sold (a) at a fixed price or prices, which may be
changed, (b) from time to time at market prices prevailing at the time of sale,
(c) at prices related to those market prices, or (d) at negotiated prices.
Dealer trading may take place in certain of the Certificates, including
Certificates not listed on any securities exchange.
Northwest may, from time to time, authorize underwriters acting as
Northwest's agents to offer and sell the Certificates upon the terms and
conditions set forth in any prospectus supplement. In connection with the sale
of Certificates, underwriters may be deemed to have received compensation from
Northwest in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Certificates for whom they may act as
agent. Underwriters may sell Certificates to or through dealers, and those
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions, which may be changed from
time to time, from the purchasers for whom they may act as agent.
If Northwest directly uses a dealer in the sale of Certificates, Northwest
will sell the Certificates to the dealer, as principal. The dealer may then
resell the Certificates to the public at varying prices to be determined by the
dealer at the time of resale. The applicable prospectus supplement will name any
dealer and set forth the terms of any of those sales.
Northwest may offer and sell Certificates through agents designated by
Northwest from time to time. The applicable prospectus supplement will name any
agent involved in the offer or sale of the Certificates and set forth any
commissions payable by Northwest to that agent. Unless the applicable prospectus
indicates otherwise, the agent will be acting on a best efforts basis for the
period of its appointment.
Northwest may directly solicit offers to purchase Certificates and sell them
directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act of 1933 with respect to
any resale of the Certificates. The applicable prospectus supplement will
describe the terms of any of those sales. Except as set forth in the applicable
prospectus supplement, no director, officer or employee of Northwest or NWA
Corp. will solicit or receive a commission in connection with direct sales by
Northwest of the Certificates, although these persons may respond to inquiries
by potential purchasers and perform ministerial and clerical work in connection
with any of these direct sales.
The applicable prospectus supplement will set forth any underwriting
compensation paid by Northwest to underwriters, dealers or agents in connection
with the offering of Certificates, and any discounts, concessions or commissions
allowed by underwriters to participating dealers. Underwriters, dealers and
agents participating in the distribution of the Certificates may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Certificates may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933.
Underwriters, dealers and agents may be entitled, under agreements with
Northwest and NWA Corp., to indemnification against and contribution toward
certain civil liabilities, including liabilities
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under the Securities Act of 1933, and to reimbursement by Northwest and NWA
Corp. for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, NWA Corp., Northwest and NWA Corp.'s other subsidiaries in the
ordinary course of business.
If the applicable prospectus supplement so indicates, subject to existing
market conditions, Northwest will authorize dealers acting as Northwest's agents
to solicit offers by certain institutions to purchase Certificates from
Northwest at the public offering price set forth in the applicable prospectus
supplement pursuant to Delayed Delivery Contracts ("Contracts") that provide for
payment and delivery on the date or dates stated in the applicable prospectus
supplement. Each Contract will be for an amount not less than, and the aggregate
principal amount of Certificates sold pursuant to Contracts shall not be less
nor more than, the respective amounts stated in the applicable prospectus
supplement. Institutions with whom Contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and other institutions, but will in all
cases be subject to the approval of Northwest. Contracts will not be subject to
any conditions, except the purchase by an institution of the Certificates
covered by its Contracts will not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which the institution is
subject. The applicable prospectus supplement will indicate the commission that
will be granted to underwriters and agents soliciting purchases of Certificates
pursuant to Contracts accepted by Northwest. Agents and underwriters will have
no responsibility in respect of the delivery or performance of Contracts.
The Certificates may or may not be listed on a national securities exchange
or a foreign securities exchange. If Northwest uses an underwriter or
underwriters in the sale of any Certificates, the applicable prospectus
supplement will contain a statement as to the underwriters' intention, if any,
at the date of the prospectus supplement to make a market in the Certificates.
No assurances can be given that there will be a market for the Certificates.
The applicable prospectus supplement will set forth the place and time of
delivery for the Certificates. Northwest will issue the Debt Securities that are
issuable upon exercise of Warrants upon payment of the exercise and otherwise in
accordance with the relevant terms applicable to the Warrants and described in
the applicable prospectus supplement.
LEGAL OPINIONS
Unless the applicable prospectus supplement indicates otherwise, the
validity of the Certificates and the Parent Guaranty will be passed upon for
Northwest by Simpson Thacher & Bartlett, New York, New York. Unless the
applicable prospectus supplement indicates otherwise, Simpson Thacher & Bartlett
will rely on the opinion of counsel for the Trustee as to certain matters
relating to the authorization, execution and delivery of such Certificates by,
and the valid and binding effect thereof on, such Trustee. Certain federal
income tax matters will be passed upon by Cadwalader, Wickersham & Taft, New
York, New York, special tax counsel to Northwest.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedule of NWA Corp. included in NWA Corp.'s Annual
Report on Form 10-K for the year ended December 31, 1998, as set forth in their
report on the consolidated financial statements and schedule incorporated in by
reference in this prospectus. Such consolidated financial statements and
schedule are incorporated in this prospectus by reference in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
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$1,500,000,000
NORTHWEST AIRLINES, INC.
PASS THROUGH CERTIFICATES
------------------
Applicable Underlying Payments
Fully and Unconditionally Guaranteed by
NORTHWEST AIRLINES CORPORATION
---------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting discounts and
commissions, are set forth in the following table.
<TABLE>
<S> <C>
Securities and Exchange Commission fee.......................... $ 283,894
Printing and engraving expenses.................................
Accountants' fees and expenses..................................
Legal fees and expenses.........................................
Blue Sky fees and expenses......................................
Trustees' fees and expenses.....................................
Rating Agency fees..............................................
Miscellaneous...................................................
---------
Total..................................................... $ *
---------
---------
</TABLE>
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* Estimated and subject to future contingencies.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 302A.521 of the Minnesota Business Corporation Act (the "Minnesota
Law") requires a Minnesota corporation to indemnify a person made or threatened
to be made a party to a proceeding by reason of the former or present official
capacity of the person against judgments, penalties, fines and reasonable
expenses (including attorneys' fees), PROVIDED that the person has not otherwise
been indemnified, was acting in good faith, received no improper personal
benefit as a result of the conduct in question, in the case of a criminal
proceeding, had no reasonable cause to believe the conduct was unlawful and,
depending upon the capacity in which such person was acting, believed that the
conduct was in the best interests of the corporation or was not considered to be
opposed to the best interests of the corporation. Under the Minnesota Law, the
termination of a proceeding by judgment, order, settlement, conviction or upon a
pleading of NOLO CONTENDERE or its equivalent does not, of itself, establish
that a person is not eligible for indemnification. Minnesota corporations are
permitted to include provisions in their bylaws or articles of incorporation
that prohibit or limit indemnification otherwise required by the Minnesota law.
Section 4.01 of Northwest Airlines, Inc.'s ("Northwest") amended and
restated bylaws (filed as Exhibit 4(n)) requires Northwest to indemnify any
persons, including officers and directors as permitted by Section 302A.521 of
the Minnesota Law.
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer,
director, employee or agent acted in good faith and in a manner he reasonably
believed to be in or not opposed to the corporation's best interests, and, for
criminal proceedings, had no reasonable cause to believe his conduct was
unlawful. A Delaware corporation may indemnify officers and directors in an
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action by or in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
In accordance with Section 102(b)(7) of the Delaware Law, the Restated
Certificate of Incorporation of Northwest Airlines Corporation ("NWA Corp.")
provides that the directors of NWA Corp. shall not be personally liable to NWA
Corp. or its stockholders for monetary damages for violations of their fiduciary
duty.
Article VIII of the bylaws, as amended and restated, of NWA Corp. (filed as
Exhibit 4(l)) provides for indemnification of the officers and directors of NWA
Corp. to the full extent permitted by applicable law.
ITEM 16. EXHIBITS
The following Exhibits are filed as part of this Registration Statement:
<TABLE>
<S> <C>
Exhibit 1(a) Form of Underwriting Agreement for Debt Securities or Warrants to Purchase
Debt Securities of Northwest.
Exhibit 1(b) Form of Underwriting Agreement for Pass Through Certificates of Northwest.
Exhibit 4(a) Senior Debt Securities Indenture, dated as of March 1, 1997, among
Northwest, NWA Corp. and State Street Bank and Trust Company ("State
Street"), as Trustee, relating to the Senior Debt Securities of Northwest
(filed as Exhibit 4(a) to the Registration Statement on Form S-3 (File No.
333-28649, and herein after "Registration Statement No. 333-28649") and
incorporated herein by reference), as supplemented by Supplemental
Indenture, dated as of November 20, 1998, among NWA Corp., Old NWA Corp.,
Northwest, and State Street, as Trustee (filed as Exhibit 4(b)(4) of NWA
Corp.'s Current Report on Form 8-K dated January 22, 1999 and incorporated
herein by reference) and Second Supplemental Indenture dated as of February
25, 1999, among NWA Corp., Old NWA Corp., Northwest and State Street as
Trustee (filed as Exhibit 4(c) of NWA Corp.'s Current Report on Form 8-K
dated April 19, 1999 and incorporated herein by reference).
Exhibit 4(b) Form of Senior Subordinated Debt Securities Indenture among Northwest, NWA
Corp. and State Street, as Trustee, relating to the Senior Subordinated Debt
Securities of Northwest (filed as Exhibit 4(b) to Registration Statement No.
33-74772 and incorporated herein by reference).
Exhibit 4(c) Form of Senior Debt Securities of Northwest (filed as Exhibit 4(c) to the
Registration Statement No. 333-28649 and incorporated herein by reference).
Exhibit 4(d) Form of Senior Subordinated Debt Securities of Northwest (filed as Exhibit
4(d) to the Registration Statement No. 333-28649 and incorporated herein by
reference).
Exhibit 4(e) Form of Warrant Agreement for Warrants to Purchase Debt Securities of
Northwest that are Sold Attached to Debt Securities of Northwest (filed as
Exhibit 4(g) to Registration Statement No. 33-74772 and incorporated herein
by reference).
Exhibit 4(f) Form of Warrant to Purchase Debt Securities of Northwest that are Sold
Attached to Debt Securities of Northwest (included as part of Exhibit 4(e)).
Exhibit 4(g) Form of Warrant Agreement for Warrants to Purchase Debt Securities of
Northwest that are Sold Alone (filed as Exhibit 4(i) to Registration
Statement No. 33-74772 and incorporated herein by reference).
</TABLE>
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<TABLE>
<S> <C>
Exhibit 4(h) Form of Warrant to Purchase Debt Securities of Northwest that are Sold Alone
(included as part of Exhibit 4(g)).
Exhibit 4(i) Pass Through Trust Agreement among NWA Corp., Northwest and State Street,
Bank and Trust Company of Connecticut ("State Street Connecticut") as
Trustee, relating to Pass Through Certificates of Northwest.
Exhibit 4(j) Form of Pass Through Certificate (included as part of Exhibit 4(i)).
Exhibit 4(k) Restated Certificate of Incorporation of NWA Corp. (filed as Exhibit 4.1 to
NWA Corp.'s Registration Statement on Form S-3 (File No. 333-69655) and
incorporated herein by reference).
Exhibit 4(l) Amended and Restated By-Laws of NWA Corp. (filed as Exhibit 4.1 to the NWA
Corp.'s Quarterly Report on Form 10-Q for the three months ended March 31,
1999 (hereinafter "1999 First 10-Q") and incorporated herein by reference).
Exhibit 4(m) Restated Certificate of Incorporation of Northwest (filed as Exhibit 4(s) to
Registration Statement No. 33-74772 and incorporated herein by reference).
Exhibit 4(n) Amended and Restated Bylaws of Northwest (filed as Exhibit 4.2 to the 1999
First 10-Q and incorporated herein by reference).
Exhibit 4(o) Certificate of Designation of Series C Preferred Stock of NWA Corp.
(included in Exhibit 4(k)).
Exhibit 4(p) Certificate of Designation of Series D Junior Participating Preferred Stock
of NWA Corp. (included in Exhibit 4(k)).
Exhibit 4(q) The Registrants hereby agree to furnish to the Commission, upon request,
copies of certain instruments defining the rights of holders of long-term
debt of the kind described in Item 601(b)(4) of Regulation S-K.
Exhibit 5 Opinion of Simpson Thacher & Bartlett as to the legality of the Securities.
Exhibit 8 Tax Opinion of Cadwalader, Wickersham & Taft relating to Pass Through
Certificates.
Exhibit 23(a)* Consent of Ernst & Young LLP.
Exhibit 23(b) Consent of Simpson Thacher & Bartlett (included as part of Exhibit 5).
Exhibit 23(c) Consent of Cadwalader, Wickersham & Taft (included as part of Exhibit 8).
Exhibit 24 Powers of Attorney (included in signature pages of this Registration
Statement).
Exhibit 25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), of State Street, as Trustee under the
Senior Debt Securities Indenture of Northwest and NWA Corp. (filed as
Exhibit 25.1 to NWA Corp.'s Current Report on Form 8-K, dated March 6, 1997,
and incorporated herein by reference).
Exhibit 25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of State
Street, as Trustee under the Senior Subordinated Debt Securities Indenture
of Northwest and NWA Corp. (filed as Exhibit 25(b) to Registration Statement
No. 333-13307 and incorporated herein by reference).
Exhibit 25(c) Form T-1 Statement of Eligibility under the Trust Indenture Act of State
Street Connecticut, as Trustee under the Pass Through Trust Agreement of
Northwest and NWA Corp.
</TABLE>
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* Filed herewith.
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ITEM 17. UNDERTAKINGS
(a) Each of the undersigned registrants hereby undertakes:
(1) 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 of 1933;
(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. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective 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;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by NWA
Corp. pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Each of the undersigned registrants hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
NWA Corp.'s annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Each of the undersigned registrants hereby undertakes if securities are
to be offered pursuant to competitive bidding: (1) to use its best efforts to
distribute prior to the opening of bids, to prospective bidders, underwriters
and dealers, a reasonable number of copies of a prospectus which at that time
meets the requirements of section 10(a) of the Securities Act of 1933, and
relating to the securities offered at competitive bidding, as contained in this
Registration Statement, together with any supplements thereto, and (2) to file
an amendment to this Registration Statement reflecting the results of bidding,
the terms of the reoffering and related matters to the extent required by the
applicable form, not later than the first use, authorized by the issuer after
the opening of bids, of a prospectus relating to the securities offered at
competitive bidding, unless no further public offering of such securities by the
issuer and no reoffering of such securities by purchasers is proposed to be
made.
II-4
<PAGE>
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a registrant
of expenses incurred or paid by a director, officer or controlling person of
such 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 applicable 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 of 1933 and will be governed by the final adjudication of such issue.
(e) Each of the undersigned registrants hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act in accordance
with the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Trust Indenture Act.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Northwest
Airlines, Inc. has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Minneapolis,
State of Minnesota, on May 25, 1999.
<TABLE>
<S> <C> <C>
NORTHWEST AIRLINES, INC.
By: /s/ DOUGLAS M. STEENLAND
-----------------------------------------
Douglas M. Steenland
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
</TABLE>
POWER OF ATTORNEY
PURSUANT TO KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Douglas M. Steenland and Mickey
P. Foret and each of them individually, his true and lawful agent, proxy and
attorney-in-fact, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to (i) act on, sign
and file with the Securities and Exchange Commission any and all amendments
(including post-effective amendments) to this Registration Statement together
with all schedules and exhibits thereto, (ii) act on, sign and file with the
Securities and Exchange Commission any registration statement relating to this
offering that is to be effective upon filing pursuant to rule 462(b) under the
Securities Act of 1933, as amended, (iii) act on, sign and file with the
Securities and Exchange Commission any exhibits to this Registration Statement
or any such registration statement or amendments (including post-effective
amendments), (iv) act on, sign and file such certificates, instruments,
agreements and other documents as may be necessary or appropriate in connection
therewith, (v) act on and file any supplement to any prospectus included in this
Registration Statement or any such registration statement or amendment and (vi)
take any and all actions which may be necessary, or appropriate in connection
therewith, granting unto such agents, proxies and attorneys-in-fact, and each of
them individually, full power and authority to do and perform each and every act
and thing necessary or appropriate to be done, as fully for all intents and
purposes as he might or could do in person, hereby approving, ratifying and
confirming all that such agents, proxies and attorneys-in-fact, any of them or
any of his or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President, Chief Executive
/s/ JOHN H. DASBURG Officer and Director
- ------------------------------ (Principal Executive May 25, 1999
John H. Dasburg Officer)
Executive Vice President
/s/ MICKEY P. FORET and Chief Financial
- ------------------------------ Officer (Principal May 25, 1999
Mickey P. Foret Financial Officer)
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Vice President-Finance and
/s/ ROLF S. ANDRESEN Chief Accounting Officer
- ------------------------------ (Principal Accounting May 25, 1999
Rolf S. Andresen Officer)
/s/ GARY L. WILSON
- ------------------------------ Chairman of the Board of May 25, 1999
Gary L. Wilson Directors
/s/ RAY W. BENNING, JR.
- ------------------------------ Director May 25, 1999
Ray W. Benning, Jr.
- ------------------------------ Director
Richard C. Blum
/s/ ELAINE L. CHAO
- ------------------------------ Director May 25, 1999
Elaine L. Chao
/s/ ALFRED A. CHECCHI
- ------------------------------ Director May 25, 1999
Alfred A. Checchi
/s/ JAMES G. COULTER
- ------------------------------ Director May 25, 1999
James G. Coulter
- ------------------------------ Director
Doris Kearns Goodwin
- ------------------------------ Director
Dennis F. Hightower
/s/ GEORGE J. KOURPIAS
- ------------------------------ Director May 25, 1999
George J. Kourpias
/s/ FREDERIC V. MALEK
- ------------------------------ Director May 25, 1999
Frederic V. Malek
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ WALTER F. MONDALE
- ------------------------------ Director May 25, 1999
Walter F. Mondale
/s/ V. A. RAVINDRAN
- ------------------------------ Director May 25, 1999
V. A. Ravindran
/s/ MICHAEL G. RISTOW
- ------------------------------ Director May 25, 1999
Michael G. Ristow
/s/ LEO M. VAN WIJK
- ------------------------------ Director May 25, 1999
Leo M. van Wijk
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Northwest
Airlines Corporation has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of
Minneapolis, State of Minnesota, on May 25, 1999.
<TABLE>
<S> <C> <C>
NORTHWEST AIRLINES CORPORATION
By: /s/ DOUGLAS M. STEENLAND
-----------------------------------------
Douglas M. Steenland
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
</TABLE>
POWER OF ATTORNEY
PURSUANT TO KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Douglas M. Steenland and Mickey
P. Foret and each of them individually, his true and lawful agent, proxy and
attorney-in-fact, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to (i) act on, sign
and file with the Securities and Exchange Commission any and all amendments
(including post-effective amendments) to this Registration Statement together
with all schedules and exhibits thereto, (ii) act on, sign and file with the
Securities and Exchange Commission any registration statement relating to this
offering that is to be effective upon filing pursuant to rule 462(b) under the
Securities Act of 1933, as amended, (iii) act on, sign and file with the
Securities and Exchange Commission any exhibits to this Registration Statement
or any such registration statement or amendments (including post-effective
amendments), (iv) act on, sign and file such certificates, instruments,
agreements and other documents as may be necessary or appropriate in connection
therewith, (v) act on and file any supplement to any prospectus included in this
Registration Statement or any such registration statement or amendment and (vi)
take any and all actions which may be necessary, or appropriate in connection
therewith, granting unto such agents, proxies and attorneys-in-fact, and each of
them individually, full power and authority to do and perform each and every act
and thing necessary or appropriate to be done, as fully for all intents and
purposes as he might or could do in person, hereby approving, ratifying and
confirming all that such agents, proxies and attorneys-in-fact, any of them or
any of his or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President, Chief Executive
/s/ JOHN H. DASBURG Officer and Director
- ------------------------------ (Principal Executive May 25, 1999
John H. Dasburg Officer)
Executive Vice President
/s/ MICKEY P. FORET and Chief Financial
- ------------------------------ Officer (Principal May 25, 1999
Mickey P. Foret Financial Officer)
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Vice President-Finance and
/s/ ROLF S. ANDRESEN Chief Accounting Officer
- ------------------------------ (Principal Accounting May 25, 1999
Rolf S. Andresen Officer)
/s/ GARY L. WILSON
- ------------------------------ Chairman of the Board of May 25, 1999
Gary L. Wilson Directors
/s/ RAY W. BENNING, JR.
- ------------------------------ Director May 25, 1999
Ray W. Benning, Jr.
- ------------------------------ Director
Richard C. Blum
/s/ ELAINE L. CHAO
- ------------------------------ Director May 25, 1999
Elaine L. Chao
/s/ ALFRED A. CHECCHI
- ------------------------------ Director May 25, 1999
Alfred A. Checchi
/s/ JAMES G. COULTER
- ------------------------------ Director May 25, 1999
James G. Coulter
- ------------------------------ Director
Doris Kearns Goodwin
- ------------------------------ Director
Dennis F. Hightower
/s/ GEORGE J. KOURPIAS
- ------------------------------ Director May 25, 1999
George J. Kourpias
/s/ FREDERIC V. MALEK
- ------------------------------ Director May 25, 1999
Frederic V. Malek
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ WALTER F. MONDALE
- ------------------------------ Director May 25, 1999
Walter F. Mondale
/s/ V. A. RAVINDRAN
- ------------------------------ Director May 25, 1999
V. A. Ravindran
/s/ MICHAEL G. RISTOW
- ------------------------------ Director May 25, 1999
Michael G. Ristow
/s/ LEO M. VAN WIJK
- ------------------------------ Director May 25, 1999
Leo M. van Wijk
</TABLE>
II-11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------ ----------------------------------------------------------------------------------------------
<S> <C>
Exhibit 1(a) Form of Underwriting Agreement for Debt Securities or Warrants to Purchase Debt Securities of
Northwest.
Exhibit 1(b) Form of Underwriting Agreement for Pass Through Certificates of Northwest.
Exhibit 4(a) Senior Debt Securities Indenture, dated as of March 1, 1997, among Northwest, NWA Corp. and
State Street Bank and Trust Company ("State Street"), as Trustee, relating to the Senior Debt
Securities of Northwest (filed as Exhibit 4(a) to the Registration Statement on Form S-3 (File
No. 333-28649, and herein after "Registration Statement No. 333-28649") and incorporated
herein by reference), as supplemented by Supplemental Indenture, dated as of November 20, 1998
among NWA Corp., Old NWA Corp., Northwest, and State Street, as Trustee (filed as Exhibit
4(b)(4) of NWA Corp.'s Current Report on Form 8-K dated January 22, 1999 and incorporated
herein by reference) and Second Supplemental Indenture dated as of February 25, 1999, among
NWA Corp., Old NWA Corp., Northwest and State Street as Trustee (filed as Exhibit 4(c) of NWA
Corp.'s Current Report on Form 8-K dated April 19, 1999 and incorporated herein by reference).
Exhibit 4(b) Form of Senior Subordinated Debt Securities Indenture among Northwest, NWA Corp. and State
Street, as Trustee, relating to the Senior Subordinated Debt Securities of Northwest (filed as
Exhibit 4(b) to Registration Statement No. 33-74772 and incorporated herein by reference).
Exhibit 4(c) Form of Senior Debt Securities of Northwest (filed as Exhibit 4(c) to the Registration
Statement No. 333-28649 and incorporated herein by reference).
Exhibit 4(d) Form of Senior Subordinated Debt Securities of Northwest (filed as Exhibit 4(d) to the
Registration Statement No. 333-28649 and incorporated herein by reference).
Exhibit 4(e) Form of Warrant Agreement for Warrants to Purchase Debt Securities of Northwest that are Sold
Attached to Debt Securities of Northwest (filed as Exhibit 4(g) to Registration Statement No.
33-74772 and incorporated herein by reference).
Exhibit 4(f) Form of Warrant to Purchase Debt Securities of Northwest that are Sold Attached to Debt
Securities of Northwest (included as part of Exhibit 4(e)).
Exhibit 4(g) Form of Warrant Agreement for Warrants to Purchase Debt Securities of Northwest that are Sold
Alone (filed as Exhibit 4(i) to Registration Statement No. 33-74772 and incorporated herein by
reference).
Exhibit 4(h) Form of Warrant to Purchase Debt Securities of Northwest that are Sold Alone (included as part
of Exhibit 4(g)).
Exhibit 4(i) Pass Through Trust Agreement among NWA Corp., Northwest and State Street Bank and Trust
Company of Connecticut ("State Street Connecticut"), as Trustee, relating to Pass Through
Certificates of Northwest.
Exhibit 4(j) Form of Pass Through Certificate (included as part of Exhibit 4(i)).
Exhibit 4(k) Restated Certificate of Incorporation of NWA Corp. (filed as Exhibit 4.1 to NWA Corp.'s
Registration Statement on Form S-3 (File No. 333-69655) and incorporated herein by reference).
Exhibit 4(l) Amended and Restated By-Laws of NWA Corp. (filed as Exhibit 4.1 to the NWA Corp.'s Quarterly
Report on Form 10-Q for the three months ended March 31, 1999 (hereinafter "1999 First 10-Q")
and incorporated herein by reference).
Exhibit 4(m) Restated Certificate of Incorporation of Northwest (filed as Exhibit 4(s) to Registration
Statement No. 33-74772 and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------ ----------------------------------------------------------------------------------------------
<S> <C>
Exhibit 4(n) Amended and Restated Bylaws of Northwest (filed as Exhibit 4.2 to the 1999 First 10-Q and
incorporated herein by reference).
Exhibit 4(o) Certificate of Designation of Series C Preferred Stock of NWA Corp. (included in Exhibit
4(k)).
Exhibit 4(p) Certificate of Designation of Series D Junior Participating Preferred Stock of NWA Corp.
(included in Exhibit 4(k)).
Exhibit 4(q) The Registrants hereby agree to furnish to the Commission, upon request, copies of certain
instruments defining the rights of holders of long-term debt of the kind described in Item
601(b)(4) of Regulation S-K.
Exhibit 5 Opinion of Simpson Thacher & Bartlett as to the legality of the Securities.
Exhibit 8 Tax Opinion of Cadwalader, Wickersham & Taft relating to Pass Through Certificates.
Exhibit 23(a)* Consent of Ernst & Young LLP.
Exhibit 23(b) Consent of Simpson Thacher & Bartlett (included as part of Exhibit 5).
Exhibit 23(c) Consent of Cadwalader, Wickersham & Taft (included as part of Exhibit 8).
Exhibit 24 Powers of Attorney (included in signature pages of this Registration Statement).
Exhibit 25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), of State Street, as Trustee under the Senior Debt Securities Indenture
of Northwest and NWA Corp. (filed as Exhibit 25.1 to NWA Corp.'s Current Report on Form 8-K,
dated March 6, 1997, and incorporated herein by reference).
Exhibit 25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of State Street, as Trustee
under the Senior Subordinated Debt Securities Indenture of Northwest and NWA Corp. (filed as
Exhibit 25(b) to Registration Statement No. 333-13307 and incorporated herein by reference).
Exhibit 25(c) Form T-1 Statement of Eligibility under the Trust Indenture Act of State Street Connecticut,
as Trustee under the Pass Through Trust Agreement of Northwest and NWA Corp.
</TABLE>
- ------------------------
* Filed herewith.
<PAGE>
EXHIBIT 23(A)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the Caption "Experts" in the
Registration Statement on Form S-3 and related Prospectuses of Northwest
Airlines, Inc. and Northwest Airlines Corporation and to the incorporation by
reference therein of our report dated January 18, 1999 with respect to the
consolidated financial statements and schedule of Northwest Airlines Corporation
included in its Annual Report on Form 10-K for the year ended December 31, 1998,
filed with the Securities and Exchange Commission.
/S/ ERNST & YOUNG LLP
Minneapolis, Minnesota
May 20, 1999
