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EXHIBIT (1)
Pricing Agreement
July 14, 1999
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, and
Xxxxxx Xxxxxxx & Co. Incorporated,
As Representatives of the
several Underwriters,
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
Xxxxxxx Xxxxx World Headquarters,
World Financial Center,
Xxxxx Xxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Dear Sirs:
Delta Air Lines, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated July 14, 1999 (the "Underwriting Agreement"),
between the Company on one hand and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated on the other hand, to issue and sell to the Underwriters named in
Schedule I hereto (the "Underwriters") the securities specified in Schedule II
hereto (the "Designated Securities"). Each of the provisions of the Underwriting
Agreement is incorporated herein by reference in its entirety, and shall be
deemed to be a part of this Agreement to the same extent as if such provisions
had been set forth in full herein; and each of the representations and
warranties set forth therein shall be deemed to have been made at and as of the
date of this Pricing Agreement, except that each representation and warranty
which refers to the Prospectus in Section 2 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in relation
to the Prospectus as amended or supplemented relating to the Designated
Securities which are the subject of this Pricing Agreement. Each reference to
the Representatives herein and in the provisions of the Underwriting Agreement
so incorporated by reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Underwriting Agreement are used herein as
therein defined. The Representative designated to act on behalf of the
Representatives and on behalf of each of the Underwriters of the Designated
Securities pursuant to Section 13 of the Underwriting Agreement and the address
of the Representatives referred to in such Section 13 are set forth at the end
of Schedule II hereto.
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An amendment to the Registration Statement, or an amendment or
supplement to the Prospectus, as the case may be, relating to the Designated
Securities, in the form heretofore delivered to you is now proposed to be filed
with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, (a) the Company agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time and
place and at the purchase price to the Underwriters set forth in Schedule II
hereto, the principal amount of Designated Securities set forth opposite the
name of such Underwriter in Schedule I hereto under the caption "Firm Designated
Securities", and (b) in the event and to the extent that you on behalf of the
Underwriters shall exercise the election to purchase Optional Designated
Securities as provided below, the Company agrees to issue and sell to each of
the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price to Underwriters set
forth in Schedule II hereto, that portion of the aggregate principal amount of
the Optional Designated Securities as to which such election shall have been
exercised (to be adjusted by you so as to eliminate denominations of less than
U.S.$25.00), determined by multiplying such aggregate principal amount of
Optional Designated Securities by a fraction, the numerator of which is the
maximum aggregate principal amount of Optional Designated Securities which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
aggregate principal amount of Optional Designated Securities which all of the
Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to U.S.$75,000,000 aggregate principal amount of Designated
Securities (the "Optional Designated Securities"), at the purchase price to the
Underwriters set forth in Schedule II hereto, for the sole purpose of covering
overallotments in the sale of the Firm Designated Securities. Any such election
to purchase Optional Designated Securities may be exercised by written notice
from you to the Company, given within a period of 15 calendar days after the
date of this Agreement, setting forth the aggregate principal amount of Optional
Designated Securities to be purchased and the date on which such Optional
Designated Securities are to be delivered, as determined by you but in no event
earlier than the Time of Delivery specified in Schedule II or, unless you and
the Company otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
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If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is or will be pursuant to the authority set forth in
a form of Agreement Among Underwriters, the form of which shall be submitted to
the Company for examination, upon request, but without warranty on the part of
the Representatives as to the authority of the signers thereof.
Very truly yours,
DELTA AIR LINES, INC.
By:
-------------------------
Name:
Title:
Accepted as of the date hereof:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXX XXXXXXX & CO. INCORPORATED,
On behalf of each of the Underwriters
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
------------------------------
Name:
Title:
Accepted as of the date hereof
with respect to Paragraph 3 of
the "Other Terms" of Schedule II:
DISCOVER BROKERAGE DIRECT
By:
------------------------------
Name:
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Title:
SCHEDULE I
Principal Principal
Amount of Amount of
Firm Optional
Designated Designated
Securities Securities
to be to be
Underwriter Purchased Purchased
----------- --------- ---------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated.................................................... $48,750,000 $7,312 500
Xxxxxx Xxxxxxx & Co. Incorporated............................................ 48,750,000 7,312,500
X.X. Xxxxxxx & Sons, Inc..................................................... 47,500,000 7,125,000
Xxxxxxx, Xxxxx & Co.......................................................... 47,500,000 7,125,000
PaineWebber Incorporated..................................................... 47,500,000 7,125,000
Prudential Securities Incorporated........................................... 47,500,000 7,125,000
Xxxxxxx Xxxxx Barney Inc..................................................... 47,500,000 7,125,000
ABN AMRO Incorporated........................................................ 5,000,000 750,000
BT Alex.Xxxxx Incorporated................................................... 5,000,000 750,000
Banc of America Securities LLC............................................... 5,000,000 750,000
Xxxxxx X. Xxxxx & Co. Incorporated........................................... 5,000,000 750,000
Bear, Xxxxxxx & Co. Inc...................................................... 5,000,000 750,000
CIBC World Markets Corp...................................................... 5,000,000 750,000
Xxxx Xxxxxxxx Incorporated................................................... 5,000,000 750,000
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation.......................... 5,000,000 750,000
EVEREN Securities, Inc....................................................... 5,000,000 750,000
Xxxxxxxxxx & Co. Inc......................................................... 5,000,000 750,000
First Union Capital Markets Corp............................................. 5,000,000 750,000
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated......................................... 5,000,000 750,000
Olde & Co., Incorporated..................................................... 5,000,000 750,000
Xxxxxxx Xxxxx & Associates, Inc.............................................. 5,000,000 750,000
XX Xxxxx Securities Corporation.............................................. 5,000,000 750,000
The Xxxxxxxx-Xxxxxxxx Company, LLC........................................... 5,000,000 750,000
Xxxxxx Xxxxxxx Incorporated.................................................. 5,000,000 750,000
U.S. Bancorp Xxxxx Xxxxxxx Inc............................................... 5,000,000 750,000
Wachovia Securities, Inc..................................................... 5,000,000 750,000
Warburg Dillon Read LLC...................................................... 5,000,000 750,000
Advest, Inc.................................................................. 2,500,000 375,000
BB&T Capital Markets, a division of Xxxxx & Xxxxxxxxxxxx..................... 2,500,000 375,000
X.X. Xxxxxxxx & Co........................................................... 2,500,000 375,000
Xxxxxxx, Xxxxxx & Co......................................................... 2,500,000 375,000
X. X. Xxxxxxxx & Co.......................................................... 2,500,000 375,000
Fidelity Capital Markets, A Division of National Financial Services Corp..... 2,500,000 375,000
Fifth Third Securities, Inc.................................................. 2,500,000 375,000
First Albany Corporation..................................................... 2,500,000 375,000
Gibraltar Securities Co...................................................... 2,500,000 375,000
Gruntal & Co., L.L.C......................................................... 2,500,000 375,000
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc............................................. 2,500,000 375,000
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Xxxx Xxxxxx Investments, Inc................................................. 2,500,000 375,000
Xxxxx Xxxxxx Investments LLC................................................. 2,500,000 375,000
Xxxxxx Xxxxxxxxxx Xxxxx Inc.................................................. 2,500,000 375,000
Xxxxxxxxxxx, Pettis, Smith, Polian Inc....................................... 2,500,000 375,000
McDonald Investments Inc..................................................... 2,500,000 375,000
Mesirow Financial, Inc....................................................... 2,500,000 375,000
Xxxxxx Xxxxxx & Company, Inc................................................. 2,500,000 375,000
Xxxxxx/Hunter Incorporated................................................... 2,500,000 375,000
Xxxxxxxx Inc................................................................. 2,500,000 375,000
Xxxxxx, Xxxxxxxx & Company, Incorporated..................................... 2,500,000 375,000
Stone & Xxxxxxxxx............................................................ 2,500,000 375,000
SunTrust Equitable Securities Corporation.................................... 2,500,000 375,000
TD Securities (USA) Inc...................................................... 2,500,000 375,000
Trilon International Inc..................................................... 2,500,000 375,000
Xxxxxxxx Capital Partners, L.P............................................... 2,500,000 375,000
Total...................................................... $500,000,000 $75,000,000
============ ===========
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SCHEDULE II
Title of Designated Securities:
81/8% Notes due July 1, 2039.
Aggregate principal amount:
$500,000,000 (subject to increase of up to
$575,000,000).
Price to Public:
100% of the principal amount.
Purchase Price to the Underwriters:
96.85% of the principal amount plus accrued interest, if any, from July
16, 1999.
Indenture:
Indenture, dated as of May 1, 1991, between the Company and The Bank of
New York.
Maturity:
July 1, 2039.
Interest Rate:
81/8% per annum. Interest accrues from July 16, 1999.
Interest Payment Dates:
January 1, April 1, July 1 and October 1, in each year, commencing
October 1, 1999.
Regular Record Dates:
Fifteen days prior to the relevant Interest Payment Date.
Redemption Provisions:
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Redeemable, at the option of the Company, in whole or in part, on or
after July 1, 2004, upon not less than 30 or more than 60 days' notice,
at a redemption price equal to 100% of the principal amount of the
Designated Securities to be redeemed plus accrued and unpaid interest.
Sinking Fund Provisions:
None.
Defeasance Provisions:
Defeasance and covenant defeasance apply.
Denominations:
$25.00 and integral multiples thereof.
Time of Delivery:
July 16, 1999. The Company and the Underwriters expressly agree that
settlement of the purchase and sale of the Firm Designated Securities
shall occur on July 16, 1999, the second business day after the date
hereof.
Closing Location:
New York, New York.
Names and addresses of Representatives:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated.
Address for Notices, etc.:
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
Xxxxxxx Xxxxx World Headquarters,
World Financial Center,
Xxxxx Xxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Other Terms:
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1. The Company covenants and agrees to list the Designated
Securities on the equity-side of the New York Stock Exchange,
Inc. by July 19, 1999.
2. If the Underwriters exercise their option to purchase the
Optional Designated Securities, the obligations of the
Underwriters to purchase the Optional Designated Securities
shall be subject to all of the conditions in Section 7 of the
Under writing Agreement; the date and time of delivery of the
Optional Designated Securities shall be deemed the "Time of
Delivery" as used in the Underwriting Agreement; and all
references to the "Designated Securities" in the Underwriting
Agreement shall be deemed to refer to the Optional Designated
Securities.
3. It is understood that the Company has requested Discover
Brokerage Direct to participate in the offering of the
Designated Securities. In consid eration of the agreement of
Discover Brokerage Direct to participate in the offering of
the Designated Securities, the Company agrees that for
purposes of Section 8 of the Underwriting Agree ment only,
Discover Brokerage Direct shall be treated as an
"Underwriter."
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ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements
and any supplementary financial information and schedules audited (and,
if applicable, financial forecasts and/or pro forma financial
information) audited by them and included or incorporated by reference
in the Registration Statement or the Prospectus comply as to form in
all material respects with the applicable accounting requirements of
the Act or the Exchange Act and the related published rules and
regulations, as applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to the representative or representatives of the Underwriters (the
"Representatives") such term to include an Underwriter or Underwriters
who act without any firm being designated as its or their
representatives and are attached hereto;
(iii) They have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of any
interim financial information included or incorporated by reference in
the Prospectus as described in Statement on Auditing Standard No. 71,
"Interim Financial Information," as indicated in their reports thereon;
and on the basis of specified procedures including inquiries of
officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to
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in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Exchange
Act as it applies to Form 10-Q and the related published rules and
regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statement
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations;
(iv) They have compared the information in the Prospectus
under selected captions with the disclosure requirements of Regulation
S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing procedures
that caused them to believe that this information does not conform in
all material respects with the disclosure requirements of Items 301,
302, [402] and 503(d), respectively, of Regulation S-K;
(v) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) the latest available unaudited condensed
consolidated statements of operations, consolidated balance
sheets and consolidated statements of cash flows included in
the Prospectus and/or included or incorporated by reference in
the Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act and the related
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published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of operations, consolidated balance
sheets and consolidated statements of cash flows included in
the Prospectus or included in the Company's Quarterly Reports
on Form 10-Q incorporated by reference in the Prospectus for
them to be in conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited financial
statements from which such data and items were derived, and
any such unaudited data and items were not determined on a
basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial
statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited financial statements included or
incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
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(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights and upon conversions of convertible securities, in each
case which were outstanding on the date of the latest balance
sheet included or incorporated by reference in the Prospectus)
or any increase in the consolidated long-term debt of the
Company and its subsidiaries, or any decreases in consolidated
net current assets or stockholders' equity or other items
specified by the Representatives, in each case as compared
with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus except in each
case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (E)
there were any decreases in consolidated operating revenues or
operating income or the total or per share amounts of
consolidated net income available to common shareholders or
other items specified by the Representatives, or any increases
in any items specified by the Representatives, except in each
case for increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference), or in Part II of,
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or in exhibits and schedules to, the Registration Statement specified
by the Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of
the Company and its subsidiaries and have found them to be in
agreement.
All references in this Annex II to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter and
to the Prospectus as amended or supplemented (including the documents
incorporated by reference therein) in relation to the applicable Designated
Securities for purposes of the letter delivered at the Time of Delivery for such
Designated Securities.
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