================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
and
SCHEDULE 13D/A
(Rule 13d-101)
(Amendment No. 4)
-----------------------
COMAIR HOLDINGS, INC.
(Name of Issuer)
DELTA AIR LINES, INC.
DELTA AIR LINES HOLDINGS, INC.
KENTUCKY SUB, INC.
(Bidders)
-----------------------
Common Stock, No Par Value
(Title of Class of Securities)
-----------------------
199789 10 8
(CUSIP Number of Class of Securities)
-----------------------
Robert S. Harkey, Esquire
Senior Vice President - General Counsel
Parent, Inc.
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
(404) 715-2387
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Bidders)
-----------------------
With Copies to:
Joseph Rinaldi
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
(212) 450-4000
CALCULATION OF FILING FEE
================================================================================
Transaction Valuation* Amount of Filing Fee**
- --------------------------------------------------------------------------------
$1,804,813,865 $360,963
========================================================== =====================
* Calculated by multiplying $23.50, the per share tender offer price, by
76,800,590, which represents (i) the sum of the number of shares of
common stock outstanding on October 21, 1999 (excluding shares of common
stock already owned by Delta Air Lines, Inc. and its affiliates) plus
(ii) the 2,346,814 shares of common stock subject to options which were
vested and exercisable as of October 21, 1999.
** Calculated as 1/50 of 1% of the transaction value.
|_| Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
Amount Previously Paid: _____________ Filing Party: _____________
Form or Registration No.: ___________ Date Filed: _____________
================================================================================
<PAGE>
CUSIP No. 199789 10 8
- ---------------------
14D-1 / 13D/A
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
Delta Air Lines, Inc.
IRS IDENTIFICATION NO. 58-0218548
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
BK
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,072,655
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
22.06%
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
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2
<PAGE>
CUSIP No. 199789 10 8
- ---------------------
14D-1 / 13D/A
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
Delta Air Lines Holdings, Inc., a wholly owned subsidiary of Delta
Air Lines, Inc.
IRS IDENTIFICATION NO. 51-0323487
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,072,655
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
22.06%
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
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3
<PAGE>
CUSIP No. 199789 10 8
- ---------------------
14D-1 / 13D/A
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
Kentucky Sub, Inc., an indirect wholly owned subsidiary of Delta Air
Lines, Inc.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
KENTUCKY
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,072,655
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
22.06%
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
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4
<PAGE>
This Tender Offer Statement on Schedule 14D-1 filed by (i) Delta Air
Lines, Inc., a Delaware corporation ("Delta"), (ii) Kentucky Sub, Inc., a
Kentucky corporation and an indirect, wholly owned subsidiary of Delta
("Kentucky Sub") (iii) and Delta Air Lines Holdings, Inc., a Delaware
Corporation and a direct wholly owned subsidiary of Delta ("Delta Holdings"),
relates to the offer by Kentucky Sub to purchase all of the issued and
outstanding shares (the "Shares") of common stock, no par value, of Comair
Holdings, Inc., a Kentucky corporation ("Comair"), at a price of $23.50 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated October 22, 1999 (the "Offer to
Purchase") and in the related Letter of Transmittal (which together constitute
the "Offer"), copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively.
Item 1. Security and Subject Company
(a) The name of the subject company is Comair Holdings, Inc., a Kentucky
corporation, which has its principal executive offices at Greater
Cincinnati/Northern Kentucky International Airport, Cincinnati, OH 45275.
(b) The exact title of the class of equity securities being sought is
shares of common stock, no par value, of Comair. As of October 21, 1999, there
were 95,526,431 Shares issued and outstanding and approximately 3,100 holders
of record. The information set forth under "Introduction" in the Offer to
Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares
are traded and certain high and low sales prices for the Shares in such
principal market is set forth in "The Tender Offer--Price Range of Shares;
Dividends" of the Offer to Purchase and is incorporated herein by reference.
Item 2. Identity and Background
(a)-(d) and (g) This Statement is filed by Delta, Kentucky Sub and Delta
Holdings. The information set forth under "Introduction", "The Tender
Offer--Certain Information Concerning Delta, Delta Holdings and Kentucky Sub"
and Schedule II of the Offer to Purchase is incorporated herein by reference.
(e) and (f) To the best knowledge of Delta, Kentucky Sub and Delta
Holdings, during the last five years, none of Delta, Kentucky Sub nor Delta
Holdings, nor any of the persons listed in Schedule II of the Offer to
Purchase, has been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company
(a) The information set forth under "Special Factors--Background of the
Offer", "Special Factors--The Merger Agreement", "Special Factors--Interests
of Certain Persons in the Offer and the Merger" and "The Tender Offer--Certain
Information Concerning Delta, Delta Holdings and Kentucky Sub" in the Offer to
Purchase is incorporated herein by reference.
(b) The information set forth under "Introduction", "Special
Factors--Background of the Offer", "Special Factors--Purpose and Structure of
the Offer and the Merger; Reasons of Delta for the Offer and the Merger",
"Special Factors--Plans for Comair after the Offer and the Merger", "Special
Factors--The Merger Agreement" and "The Tender Offer-- Certain Information
Concerning Delta, Delta Holdings and Kentucky Sub" in the Offer to Purchase is
incorporated herein by reference.
5
<PAGE>
Item 4. Source and Amount of Funds or Other Consideration
(a)-(b) The information set forth under "The Tender Offer--Financing of
the Offer and the Merger" in the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder
(a)-(e) The information set forth under "Introduction", "Special
Factors--Background of the Offer", "Special Factors--Purpose and Structure of
the Offer and the Merger; Reasons of Delta for the Offer and the Merger",
"Special Factors--Plans for Comair After the Offer and the Merger", "Special
Factors--The Merger Agreement", "The Tender Offer--Financing of the Offer and
the Merger" and "The Tender Offer--Dividends and Distributions" in the Offer
to Purchase is incorporated herein by reference.
(f) and (g) The information set forth under "The Tender Offer--Certain
Effects of the Offer" in the Offer to Purchase is incorporated herein by
reference.
Item 6. Interest in Securities of the Subject Company
(a)-(b) The information set forth under "Special Factors--Interests of
Certain Persons in the Offer and the Merger", "The Tender Offer--Certain
Information Concerning Comair", "The Tender Offer--Certain Information
Concerning Delta, Delta Holdings and Kentucky Sub" and Schedules I and II of
the Offer to Purchase is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities
The information set forth under "Introduction", "Special
Factors--Background of the Offer", "Special Factors--Purpose and Structure of
the Offer and the Merger; Reasons of Delta for the Offer and the Merger",
"Special Factors--Plans for Comair After the Offer and the Merger", "Special
Factors--The Merger Agreement", "Special Factors--Interests of Certain Persons
in the Offer and the Merger", "The Tender Offer--Certain Information
Concerning Comair" and "The Tender Offer--Certain Information Concerning
Delta, Delta Holdings and Kentucky Sub" in the Offer to Purchase is
incorporated herein by reference.
Item 8. Persons Retained, Employed or to Be Compensated
The information set forth under "Introduction", "Special Factors--Opinion
of Financial Advisor to Comair Board" and "The Tender Offer--Fees and
Expenses" in the Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders
Not applicable.
Item 10. Additional Information
(a) The information set forth under "Special Factors--Interests of
Certain Persons in the Offer and the Merger" in the Offer to Purchase is
incorporated herein by reference.
(b)-(c) The information set forth under "The Tender Offer--Certain Legal
Matters; Regulatory Approvals" in the Offer to Purchase is incorporated herein
by reference.
6
<PAGE>
(d) The information set forth under "The Tender Offer--Certain Effects of
the Offer" in the Offer to Purchase is incorporated herein by reference.
(e) The information set forth under "The Tender Offer -- Certain Legal
Matters; Regulatory Approvals" in the Offer to Purchase and in Exhibits (g)(1)
and (g)(2) hereto is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and Letter of
Transmittal and the Agreement and Plan of Merger, dated as of October 17,
1999, among Comair, Delta and Kentucky Sub, copies of which appear as Exhibits
(a)(1), (a)(2) and (c)(2) hereto, is incorporated herein by reference.
Item 11. Material to Be Filed as Exhibits
(a)(1) Offer to Purchase dated October 22, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from Goldman, Sachs & Co. to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal on
October 22, 1999.
(a)(8) Text of Press Release issued by Delta on October 18, 1999
(incorporated herein by reference to Exhibit 4 of Amendment No. 3 to
the Statement on Schedule 13D filed by Delta and Delta Holdings on
October 18, 1999).
(b)(1) Term Loan Commitment Letter from Chase Securities Inc. and The Chase
Manhattan Bank to Delta dated October 17, 1999.
(c)(1) Stock Purchase Agreement dated June 11, 1986, between Delta and
Comair.
(c)(2) Agreement and Plan of Merger, dated as of October 17, 1999, among
Comair, Delta and Kentucky Sub (Incorporated herein by reference
to Exhibit 3 of Amendment No. 3 to the Statement on Schedule 13D
filed by Delta and Delta Holdings on October 18, 1999).
(c)(3) Confidentiality Agreement, dated September 29, 1999, between Comair
and Delta.
(d) Not applicable.
(e) Not applicable
(f) Not applicable.
(g)(1) Complaint filed on October 20, 1999 in the Supreme Court of the State
of New York, County of Nassau in an action entitled Larry Byrnes and
Joe Bechtold v. Robert M. Castellini, et al.
7
<PAGE>
(g)(2) Complaint filed on or about October 20, 1999, in Jefferson Circuit
Court Division 13 (Commonwealth of Kentucky) in an action entitled
Russell Barkley v. Comair Holdings, Inc. et al. (Case No.
99C106214).
8
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
October 22, 1999 DELTA AIR LINES, INC.
By: /s/ Edward H. West
--------------------------------
Name: Edward H. West
Title: Executive Vice President
and Chief Financial
Officer
DELTA AIR LINES HOLDINGS, INC.
By: /s/ Leslie P. Klemperer
--------------------------------
Name: Leslie P. Klemperer
Title: Vice President and Secretary
KENTUCKY SUB, INC.
By: /s/ Dean C. Arvidson
--------------------------------
Name: Dean C. Arvidson
Title: Secretary
9
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
(a)(1) Offer to Purchase dated October 22, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from Goldman, Sachs & Co. to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trus
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal on
October 22, 1999
(b)(1) Term Loan Commitment Letter from Chase Securities Inc. and The Chase
Manhattan Bank to Delta dated October 17, 1999.
(c)(1) Stock Purchase Agreement dated June 11, 1986, between Delta and
Comair.
(c)(3) Confidentiality Agreement, dated September 29, 1999, between Comair
and Delta.
(g)(1) Complaint filed on October 20, 1999 in the Supreme Court of the State
of New York, County of Nassau in an action entitled Larry Byrnes and
Joe Bechtold v. Robert M. Castellini, et al.
(g)(2) Complaint filed on or about October 20, 1999 in Jefferson Circuit
Court Division 13 (Commonwealth of Kentucky) in an action entitled
Russell Barkley v. Comair Holdings, Inc. et al. (Case No. 99C106214).
EXHIBIT (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Comair Holdings, Inc.
at
$23.50 Net per Share
by
Kentucky Sub, Inc.
an indirect, wholly owned subsidiary of
Delta Air Lines, Inc.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, NOVEMBER 19, 1999, UNLESS THE OFFER IS EXTENDED (SUCH
DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE").
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF COMAIR HOLDINGS, INC. ("COMAIR") HAS UNANIMOUSLY
APPROVED AND ADOPTED THE MERGER AGREEMENT (AS DEFINED HEREIN) AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS
DEFINED HEREIN), AND DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO, AND IN
THE BEST INTERESTS OF, COMAIR AND THE HOLDERS OF SHARES (AS DEFINED HEREIN).
THE COMAIR BOARD RECOMMENDS THAT COMAIR SHAREHOLDERS ACCEPT THE OFFER, TENDER
THEIR SHARES PURSUANT TO THE OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
the then issued and outstanding shares (the "Shares") of common stock, no par
value, of Comair which, when taken together with Shares owned by Delta Air
Lines, Inc. ("Delta") or its affiliates, represent at least two-thirds of the
then issued and outstanding Shares on a fully diluted basis (the "Minimum
Condition"). See "The Tender Offer--Certain Conditions of the Offer."
Morgan Stanley & Co. Incorporated ("Morgan Stanley") has delivered to the
Board of Directors of Comair its written opinion as investment bankers that, as
of the date of such opinion and based on and subject to the matters stated in
such opinion, the consideration to be received by the holders of Shares
pursuant to the Merger Agreement is fair from a financial point of view to the
holders of Shares (other than Delta and its affiliates). See "Special
Factors--Opinion of Financial Advisor to the Comair Board" for further
information concerning the opinion of Morgan Stanley.
IMPORTANT
Any shareholder who desires to tender all or any portion of such
shareholder's Shares should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) that accompanies this Offer to Purchase in
accordance with the instructions in such Letter of Transmittal, have such
shareholder's signature thereon guaranteed if required by Instruction 1 to such
Letter of Transmittal, and mail or deliver the Letter of Transmittal (or such
facsimile) together with the certificate(s) ("Share Certificates") representing
the tendered Shares and any other required documents to Harris Trust Company of
New York (the "Depositary") (at the Depositary's address set forth on the back
cover of this Offer to Purchase) or tender such shareholder's Shares pursuant
to the procedure for book-entry transfer set forth in "The Tender
Offer--Procedures for Accepting the Offer and Tendering Shares" or (2) request
such shareholder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for such shareholder. A shareholder whose
Shares are registered in the name of a broker, dealer, bank, trust company or
other nominee must contact such broker, dealer, bank, trust company or other
nominee if such shareholder desires to tender such Shares.
A shareholder who desires to tender such shareholder's Shares and whose
Share Certificates are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, or who cannot deliver all
required documents to the Depositary prior to the expiration of the Offer, may
tender such Shares by following the procedure for guaranteed delivery set forth
under the caption "The Tender Offer--Procedures for Accepting the Offer and
Tendering Shares."
Questions or requests for assistance may be directed to Morrow & Co., Inc.
(the "Information Agent") or Goldman, Sachs & Co. (sometimes referred to herein
as the "Dealer Manager") at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other related materials
may be obtained from the Information Agent or the Dealer Manager.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR
ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
-----------------------
The Dealer Manager for the Offer is:
Goldman, Sachs & Co.
October 22, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
----
<S> <C>
INTRODUCTION......................................................................................................1
SPECIAL FACTORS...................................................................................................3
Background of the Offer......................................................................................3
Recommendation of the Comair Board; Fairness of the Offer and the Merger.....................................7
Opinion of Financial Advisor to the Comair Board.............................................................9
Position of Delta, Kentucky Sub and Delta Holdings Regarding Fairness of the Offer and the Merger...........14
Purpose and Structure of the Offer and the Merger; Reasons of Delta for the Offer and the Merger............15
Plans for Comair After the Offer and the Merger.............................................................15
Rights of Shareholders in the Offer and the Merger..........................................................16
The Merger Agreement........................................................................................16
The Confidentiality Agreement...............................................................................26
Interests of Certain Persons in the Offer and the Merger....................................................26
THE TENDER OFFER.................................................................................................30
Terms of the Offer..........................................................................................30
Acceptance for Payment and Payment for Shares...............................................................31
Procedures for Accepting the Offer and Tendering Shares.....................................................32
Withdrawal Rights...........................................................................................34
Certain United States Federal Income Tax Consequences.......................................................35
Price Range of Shares; Dividends............................................................................36
Certain Information Concerning Comair.......................................................................37
Certain Information Concerning Delta, Delta Holdings and Kentucky Sub.......................................38
Financing of the Offer and the Merger.......................................................................39
Dividends and Distributions.................................................................................41
Certain Effects of the Offer................................................................................41
Certain Conditions of the Offer.............................................................................42
Certain Legal Matters; Regulatory Approvals.................................................................45
Fees and Expenses...........................................................................................48
Miscellaneous...............................................................................................49
SCHEDULES
SCHEDULE I - Directors and Executive Officers of Comair
SCHEDULE II - Directors and Executive Officers of Delta, Delta Holdings and Kentucky Sub; Proposed
Directors and Executive Officers of the Surviving Company
</TABLE>
-i-
<PAGE>
To the Holders of Shares of Common Stock of
Comair Holdings, Inc.:
INTRODUCTION
Kentucky Sub, Inc. ("Kentucky Sub"), a Kentucky corporation, hereby offers
to purchase any and all issued and outstanding shares of common stock, no par
value (the "Shares"), of Comair Holdings, Inc., a Kentucky corporation,
(together with its subsidiaries, where applicable, "Comair") (other than Shares
already owned by Delta Air Lines, Inc. ("Delta"), a Delaware corporation, and
its subsidiaries) at a price of $23.50 per Share, net to the seller in cash
(the "Offer Price"), upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer").
Kentucky Sub is a direct, wholly owned subsidiary of Delta Air Lines Holdings,
Inc. ("Delta Holdings"), a Delaware corporation, and an indirect, wholly owned
subsidiary of Delta.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Kentucky Sub pursuant to the Offer. Delta or Kentucky Sub will pay all charges
and expenses of the dealer manager, Goldman, Sachs & Co. (the "Dealer Manager"
or "Goldman, Sachs"), the depositary, Harris Trust Company of New York (the
"Depositary") and the information agent, Morrow & Co., Inc. (the "Information
Agent"), incurred in connection with the Offer. See "The Tender Offer--Fees and
Expenses."
As of October 21, 1999, Delta beneficially owned 21,072,655 of the
95,526,431 outstanding Shares, representing approximately 22.06% of the Shares
then outstanding.
THE BOARD OF DIRECTORS OF COMAIR (THE "COMAIR BOARD") HAS UNANIMOUSLY
APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, COMAIR AND THE HOLDERS
OF SHARES. THE COMAIR BOARD RECOMMENDS THAT COMAIR'S SHAREHOLDERS ACCEPT THE
OFFER, TENDER THEIR SHARES PURSUANT TO THE OFFER AND APPROVE AND ADOPT THE
MERGER AGREEMENT.
Morgan Stanley & Co. Incorporated ("Morgan Stanley") has delivered to the
Comair Board its written opinion as investment bankers that, as of the date of
such opinion and based on and subject to the matters stated in such opinion,
the consideration to be received by holders of Shares pursuant to the Merger
Agreement is fair from a financial point of view to such holders (other than
Delta and its affiliates). See "Special Factors--Opinion of Financial Advisor
to the Comair Board" for further information concerning the opinion of Morgan
Stanley.
Comair has been advised that all of its directors and executive officers
intend to tender or cause the tender of all of their Shares pursuant to the
Offer.
Comair has filed with the Securities and Exchange Commission (the
"Commission") a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which is being mailed to shareholders herewith.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
the then issued and outstanding Shares of Comair which, when taken together
with Shares owned by Delta and its affiliates, represent at least two-thirds of
the then issued and outstanding Shares on a fully diluted basis (the "Minimum
Condition"). See "The Tender Offer--Certain Conditions of the Offer."
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of October 17, 1999 (the "Merger Agreement"), among Comair, Delta and
Kentucky Sub. The Offer is not conditioned on obtaining financing. The
<PAGE>
Merger Agreement provides that, among other things, as promptly as practicable
after the purchase of Shares pursuant to the Offer and the satisfaction (or
waiver, to the extent permissible under the Merger Agreement) of the other
conditions set forth in the Merger Agreement, Kentucky Sub will, in accordance
with the requirements of chapter 271B of the Kentucky Business Corporation Act
(the "KBCA"), be merged with and into Comair (the "Merger"), with Comair
continuing as the surviving corporation (the "Surviving Company"). At the
effective time of the Merger (the "Effective Time"), subject to the terms and
conditions of the Merger Agreement, each Share outstanding immediately prior to
the Effective Time (other than Shares held in the treasury of Comair, Shares
owned by Delta or its affiliates or Shares as to which dissenters' rights have
been timely exercised) shall be converted into the right to receive the per
Share price paid in the Offer in cash, without interest (the "Merger
Consideration"). The Merger Agreement is more fully described in "Special
Factors--The Merger Agreement."
The Merger is subject to the satisfaction or waiver of certain conditions,
including, unless no longer required by the KBCA, the approval and adoption of
the Merger Agreement by the requisite vote of the shareholders of Comair. See
"Special Factors--The Merger Agreement." The Merger is not conditioned on
obtaining financing. Under the KBCA and Comair's Articles of Incorporation, the
affirmative vote of two-thirds of the outstanding Shares is required to approve
and adopt the Merger Agreement and the Merger. If Delta, Kentucky Sub and
Delta's other affiliates own two-thirds of the outstanding Shares as a result
of the Offer or otherwise, Delta and Kentucky Sub would have sufficient voting
power to and would approve the Merger without the affirmative vote of any other
shareholder of Comair. Unless it is no longer required to do so under the KBCA,
Comair has agreed to cause a meeting of its shareholders as soon as reasonably
practicable after consummation of the Offer for the purpose of voting on the
approval and adoption of the Merger and the Merger Agreement. Delta, Delta
Holdings and Kentucky Sub have agreed to vote their Shares in favor of the
Merger.
No dissenters' rights are available in connection with the Offer; however,
shareholders of Comair who have not tendered their Shares in the Offer will
have dissenters' rights in connection with the Merger. Such dissenters' rights
are described in "Special Factors--Rights of Shareholders in the Offer and the
Merger."
As of the close of business on October 21, 1999, there were outstanding
95,526,431 Shares and options to purchase an aggregate of 5,610,020 Shares at
an average exercise price of $12.81 per Share (of which options to purchase an
aggregate of 2,346,814 Shares were exercisable). In addition, Delta and its
affiliates owned 21,072,655 of the outstanding Shares. Based upon the
foregoing, Delta believes that the Minimum Condition will be satisfied if at
least 42,611,632 Shares (other than Shares held by Delta or its affiliates) are
validly tendered and not withdrawn prior to the Expiration Date (as defined
herein) (assuming that no options on Shares are exercised prior to the
Expiration Date).
This Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is
made with respect to the Offer.
2
<PAGE>
SPECIAL FACTORS
Background of the Offer
Marketing and Code Sharing Arrangements Between Comair and Delta
Comair has operated in Cincinnati since 1984 and in Orlando since 1987 as
a "Delta Connection" carrier pursuant to a marketing agreement with Delta (the
"Delta Connection Agreement"). The current Delta Connection Agreement was
entered into on October 1, 1989 and expires on October 31, 1999. Delta and
Comair currently intend to extend the Delta Connection Agreement on a
month-to-month basis after it expires.
Under the Delta Connection program, all Comair flights are promoted as
part of the Delta route network in computer systems used by travel agents and
in advertising and published timetables, and all Comair flights carry the Delta
designator code. Comair flights are sold on Delta ticket stock, and all revenue
from Comair ticket sales by travel agents are remitted to Delta. Delta handles
Comair reservations calls. Customer payments for tickets purchased from agents
or at Delta city ticket offices for Comair flights are remitted to Delta.
Comair and Delta split revenues (less cost of sales) in accordance with a
revenue proration arrangement. Under this arrangement, Comair is paid all
revenue (less cost of sales) for tickets sold to passengers not connecting to a
Delta-operated flight (i.e., local traffic). Revenue for passengers traveling
on a ticket with an Comair flight connecting to a Delta-operated flight are
prorated between Delta and Comair using a proration methodology that considers
the mileage of the flight segments flown and the relative cost of the service
provided, minus the cost of sales, with adjustments made for international
tickets.
As noted above, all Comair flights operate under the Delta code. These
flights generated revenues for Comair of approximately $625 million and $726
million in Comair's fiscal years ended March 31, 1998 and 1999, respectively,
representing substantially all of Comair's revenues for those periods. During
Comair's fiscal year ended March 31, 1999, approximately 45% of Comair's
passengers connected with or from Delta flights. Pursuant to separate
arrangements, Comair leases reservation equipment and certain facilities from
Delta, and Delta provides certain services to Comair including reservations and
passenger and ground handling services. Expenses under these arrangements in
Comair's fiscal years ended March 31, 1998 and 1999 were approximately $26.2
million and $30.4 million, respectively.
Delta Ownership of Comair Shares; Stock Agreement
On July 25, 1986, Delta purchased from Comair 1,850,000 Shares pursuant to
a stock purchase agreement dated June 11, 1986 (the "Stock Agreement") between
the two companies. Delta made this investment for the purposes of obtaining a
significant equity interest in Comair, and to enhance Comair's continuing
participation in the "Delta Connection" program. After giving effect to the
issuance of these Shares, Delta's investment represented approximately 19.35%
of the then outstanding number of Shares.
On December 27, 1989, Delta assigned and transferred to Delta Holdings all
of the Shares then owned by Delta.
The Stock Agreement provides that, if Delta so requests, (i) Comair will
take such action as may be necessary to cause the election to the Comair Board
of one designee of Delta and reasonably acceptable to Comair and (ii) for as
long as Delta owns at least 10% of the Shares, Comair will include at least one
Delta designee reasonably acceptable to Comair on its slate of nominees for
election as directors and will use its reasonable best efforts to assure that
such individual is elected to the Comair Board (including, without limitation,
by soliciting proxies in favor of such election). Since March 31, 1997, neither
Delta nor any of its affiliates have nominated any designees to or had any
representatives on the Comair Board. In addition, the Stock Agreement provides
Delta certain registration rights for the Shares acquired by it pursuant to the
Stock Agreement and certain preemptive rights with respect to future issuances
of Shares or other voting securities of Comair.
Pursuant to the Stock Agreement, Delta has agreed that, except under
certain circumstances, neither it nor any entity controlled by it will acquire,
without the written consent of Comair, ownership of more than 25% of the Shares
3
<PAGE>
(the "Standstill Agreement"). Comair consented to the Offer and the Merger in
the Merger Agreement. In addition, under the Stock Agreement, Delta has granted
Comair a right of first refusal with respect to any voting securities of Comair
that Delta may determine to sell, at any time Delta owns at least 5% of the
outstanding Shares, in a private sale or in certain public offerings registered
under the Securities Act.
Other than as described above, neither Delta nor any of its subsidiaries
has acquired or disposed of any Shares prior to the date hereof. As of October
21, 1999, Delta beneficially owned 21,072,655 of the 95,526,431 outstanding
Shares, representing approximately 22.06% of the Shares then outstanding. The
increase since 1986 in the number of Shares beneficially owned by Delta, and in
its relative percentage ownership of Shares, is the result of stock splits and
repurchases by Comair of Shares since that time.
Recent Contacts, Negotiations and Transactions
On December 18, 1998, representatives of Delta and Comair met to discuss
various aspects of the relationship between Delta and Comair, and to exchange
views as to the strategic direction of the regional commuter market and the
Delta Connection program. This included an exploratory discussion of the
concept of a transaction that would include certain operations of Delta, ASA
Holdings, Inc. ("ASA") and Comair. Delta subsequently informed Comair that
Delta was considering various alternatives with respect to its relationship
with ASA and it did not at that time intend to pursue further discussions with
Comair concerning such a concept. On February 16, 1999, Delta and ASA announced
that they had entered into an Agreement and Plan of Merger. ASA became an
indirect, wholly owned subsidiary of Delta on May 11, 1999.
During the months of May, June and July 1999, representatives of Delta and
Comair again had preliminary contacts concerning the possibility of exploring a
transaction involving Comair and ASA. No substantive discussions concerning
such a transaction occurred. On May 18 and July 20, 1999, at regularly
scheduled meetings of Comair's Board of Directors, the Comair Board reviewed
the status of the discussions with Delta regarding the upcoming October 31,
1999 expiration of the Delta Connection Agreement between Delta and Comair as
well as various strategic alternatives and initiatives that could be considered
in light of such expiration.
On July 29, 1999, Leo Mullin, the President and Chief Executive Officer of
Delta, and David R. Mueller, the Chairman and Chief Executive Officer of
Comair, discussed the upcoming October 31, 1999 expiration of the Delta
Connection Agreement. Mr. Mullin stated that Delta believed the existing
commercial relationship undercompensated Delta and overcompensated Comair and
was inconsistent with current market terms, including recent agreements between
Delta and certain other Delta Connection carriers. Mr. Mullin identified as
possible alternatives for addressing the expiration of the Delta Connection
Agreement: (i) renegotiation of the existing agreement, which might include a
different type of commercial relationship pursuant to which Delta would
purchase Comair's capacity (i.e. available seat miles) and would pay Comair a
base rate equal to Comair's cost plus a specified percentage that would
increase if Comair met certain performance incentives (an "ASM Buy") or (ii) if
Comair thought it appropriate, an acquisition of Comair by Delta. Mr. Mullin
added, however, that it was premature at that time to discuss an acquisition
because Delta had not done the work necessary to decide whether this was a
viable alternative. Mr. Mueller said that although discussion of an acquisition
of Comair might be premature, he would discuss these matters with Comair's
Board at their scheduled August 10, 1999, meeting.
At such meeting on August 10, 1999, Comair's Board again discussed the
various options that could be considered in light of the October 31, 1999,
expiration of the Delta Connection Agreement, including a renegotiation of the
Delta Connection Agreement, alternative acquisitions, code-sharing arrangements
with other carriers, multiple connection agreements and an acquisition of
Comair by Delta. Comair's Board directed management to begin to actively
explore certain of these alternatives. Pursuant to this direction, Comair
retained Morgan Stanley as its financial advisor in the consideration of these
alternatives.
4
<PAGE>
On August 12, 1999, Mr. Mueller informed Mr. Mullin in a telephone
conversation that Comair's Board thought that Comair should remain independent
and that Comair was currently analyzing a range of alternatives and initiatives
including renegotiation of the Delta Connection Agreement. Mr. Mueller asked
Mr. Mullin to call him back and tell him how he wished to proceed.
On August 17, 1999, Mr. Mullin telephoned Mr. Mueller and informed him
that Delta's preferred approach for addressing the October 31, 1999, expiration
of the Delta Connection Agreement was to reach agreement on the terms of a new
commercial agreement between the parties and not to pursue an acquisition of
Comair. Later that day, Warren Jenson, then the Chief Financial Officer of
Delta, Edward West, the current Chief Financial Officer of Delta, and Brian
LaBrecque of Delta met with a team from Comair headed by David Siebenburgen,
President, Chief Operating Officer and a director of Comair. At this meeting,
Delta's representatives outlined the broad terms of a proposal for a new
marketing agreement. Delta's representatives stated that the new arrangements
should be more comparable to current market terms as reflected in ASM Buy
agreements recently entered into between Delta and certain other Delta
Connection carriers. Comair's representatives said that they were willing to
consider using Delta's proposed terms as the basis for discussions with respect
to new operations, but proposed that the current economic arrangements stay in
place for flights operating in Cincinnati. In telephone calls on August 23,
1999, and in a meeting held on August 24, 1999, representatives of Delta and
Comair discussed Delta's proposed term sheet for an ASM Buy agreement.
On August 18 and September 8, 1999, the Comair Board met with
representatives of Morgan Stanley to discuss various strategic alternatives and
initiatives, and to review the impact of such alternatives and initiatives on
Comair and the value of the Shares.
On August 27, 1999, Messrs. Mullin and Jenson met with Mr. Mueller and
Peter Forster, an outside director of Comair. At this meeting, Comair's
representatives expressed their concerns with Delta's proposed terms for a new
commercial agreement and suggested alternative approaches for addressing the
October 31, 1999, expiration of the Delta Connection Agreement, including the
possibility of monetizing a portion of Delta's equity interest in Comair.
Messrs. Mullin and Jenson asked Mr. Forster to provide them with a written
outline of these proposals, but stated that the basis for any discussions had
to be a market based commercial agreement.
On September 17, 1999, Mr. Mullin, Frederick Reid, the Chief Marketing
Officer of Delta, and Mr. West met with Messrs. Mueller, Forster and
Siebenburgen. At that meeting Mr. Forster stated that while Comair's preferred
approach was to continue its relationship with Delta, Comair was exploring
certain other options, including arrangements with other airlines, in the event
Delta and Comair could not agree on terms for a new commercial agreement. He
then proposed four alternative approaches for continuing the Delta-Comair
relationship: (i) maintaining the existing economic arrangements for Comair
operations at Cincinnati and negotiating new arrangements based on current
market terms for such arrangements for all other existing and new business,
(ii) using the same arrangements as described in clause (i) above but with
Comair managing ASA's operations on behalf of Delta for a negotiated fee, (iii)
Comair purchasing ASA from Delta and utilizing arrangements similar to those
described in clause (i) above for Comair and ASA and (iv) Delta acquiring
Comair. Mr. Mullin said that the alternative described in clause (i) was not
consistent with existing market terms and that Delta was not interested in
pursuing the alternatives involving ASA. As to the acquisition alternative, Mr.
Mullin stated that, while Delta did not rule out the possibility of exploring
whether an acquisition of Comair was viable, Delta's preference was to put in
place a new commercial agreement with Comair and he believed the parties should
focus their attention on attempting to negotiate such an agreement. Mr. Mullin
also said these matters needed to be resolved in the next few weeks as Delta
would not extend the Delta Connection Agreement after its October 31, 1999,
expiration for any significant period of time.
During the next week, representatives of Delta and Comair continued to
discuss the possible terms of a new commercial agreement. On September 23,
1999, Mr. Siebenburgen and Mr. West had a telephone conversation in which Mr.
Siebenburgen stated that Comair and Delta were still far apart on the economic
terms of a new commercial agreement. Messrs. Siebenburgen and West agreed that
Comair and Delta should continue their efforts to reach an agreement. The
parties decided it would be appropriate for Delta's and Comair's respective
advisors to begin to discuss how to proceed with respect to exploring the
viability of an acquisition of Comair by Delta. Over the next few days, the
legal and financial advisors of Comair and Delta held preliminary discussions
on the scope of due diligence and the terms of a confidentiality agreement. No
agreement was reached on these matters.
In a letter dated September 24, 1999, Comair delivered its response to
Delta's proposals concerning a new commercial agreement.
5
<PAGE>
On September 30, 1999, Messrs. Mueller and Mullin had a telephone
conversation in which they discussed the status of the ongoing negotiations
over the commercial agreement. In the course of this conversation, Mr. Mullin
said that it was necessary for the parties to make substantial progress in
resolving their commercial relationship over the next few weeks since Delta
would require some time to implement alternative plans in the event no
agreement between Delta and Comair was reached.
During a discussion on September 30, 1999, between representatives of
Goldman Sachs, the financial advisor to Delta, and Morgan Stanley, the Goldman
Sachs representative stated that, although Delta had not determined whether to
proceed with the acquisition alternative and was not in a position to make an
acquisition proposal at that time, it was his view that, if the acquisition
alternative were to be pursued, a per Share value for Comair in a range from
"the very high teens to $20.00" might be appropriate, subject to performing the
necessary work to validate such value.
On October 1, 1999, the Comair Board met to discuss the status of the
discussions with Delta regarding a possible acquisition of Comair by Delta, the
upcoming October 31, 1999, expiration of the Delta Connection Agreement and
various other strategic alternatives and initiatives, including the possibility
of no ongoing relationship with Delta, entering into code-sharing arrangements
with other carriers, entering into multiple connection agreements and entering
into certain other commercial arrangements with other carriers. Representatives
from Morgan Stanley gave a presentation regarding the valuation impact of
various strategic alternatives and initiatives, and representatives of Shearman
& Sterling, special counsel to Comair, discussed with the Comair Board the
legal standards applicable to its consideration of these alternatives.
On October 4, 1999, Morgan Stanley informed Goldman Sachs that Comair's
Board had met and had discussed a number of alternatives available to Comair,
and had instructed management and Morgan Stanley to actively explore certain
alternatives and strategic initiatives that did not involve Delta. The Morgan
Stanley representative also explained that the Comair Board had determined that
there was no basis for Comair to proceed with an acquisition by Delta of Comair
at that time but that Comair wished to continue to try to reach agreement on
the terms of a new commercial agreement with Delta. On October 6, 1999, a
representative of Morgan Stanley stated to Mr. West that the Comair Board was
actively exploring alternatives other than the acquisition alternative but was
interested in continuing negotiations with Delta on a new commercial agreement.
In the course of that discussion, the Morgan Stanley representative indicated
that, in his view, if Comair's Board were ever to seriously consider an
acquisition, it would be at a price in excess of the potential valuations
previously expressed by Goldman Sachs.
On October 6, 1999, Delta sent a letter to Comair modifying in certain
respects Delta's previously proposed terms for a new commercial agreement in an
attempt to address certain of Comair's concerns. In this letter, Delta also
expressed the need to resolve the negotiations on the commercial agreement
before October 31, 1999 for operational and logistical reasons. On October 8,
1999, representatives of Delta and Comair met and discussed their respective
positions on the commercial agreement negotiations.
On October 12, 1999, representatives of Morgan Stanley and Goldman Sachs
had a telephone conversation to discuss the parties' respective alternatives in
light of the status of the commercial agreement negotiations. In the course of
this discussion, the Goldman Sachs representative referred to the conversation
between the Morgan Stanley representative and Mr. West on October 6, 1999, and
indicated that, in his view, if an acquisition alternative were pursued, a per
Share value that was near the midpoint of a $20-$25 range would be appropriate,
subject to performing the necessary work to validate that value. The Morgan
Stanley representative responded that he believed that the Comair Board was no
longer engaged in exploring the feasibility of an acquisition, but that he
would report the conversation to Comair's management.
The following day, Mr. Mueller called Mr. Mullin to suggest that they meet
to discuss whether an acquisition of Comair by Delta represented a viable and
mutually satisfactory alternative. Mr. Mullin suggested that in order for Delta
to assess the feasibility of an acquisition of Comair, due diligence
investigations should begin prior to that meeting, and Mr. Mueller agreed.
Delta, Comair and their respective representatives and advisors then had a
number of discussions concerning the scope of due diligence and the terms of a
confidentiality agreement between the parties. On the evening of October 13,
1999, Delta and Comair entered into the Confidentiality Agreement and Delta
commenced due diligence
6
<PAGE>
the next morning. On the evening of October 15, 1999, the respective legal
advisors of Delta and Comair held preliminary discussions concerning the terms
of a draft merger agreement.
On the morning of October 16, 1999, Messrs. Mueller and Forster met with
Messrs. Mullin and West to determine whether an agreement could be reached
concerning the acquisition of Comair by Delta. At that meeting, after lengthy
negotiations, the parties agreed to recommend to their respective Boards of
Directors a purchase price of $23.50 per Share in cash, subject to satisfactory
completion of due diligence and reaching agreement on the terms of a merger
agreement. At this meeting, the parties also discussed the possibility of Mr.
Mueller entering into a consultancy arrangement with Delta and the role of Mr.
Siebenburgen in Delta's organization in the event that Delta acquired Comair.
At a meeting of the Comair Board held on the evening of October 16, 1999,
Mr. Forster reviewed with the Comair Board the discussions with Messrs. Mullin
and West earlier in the day, and management reviewed various alternative
strategies and initiatives available to Comair, including an alternative
business plan that contemplated no ongoing relationship with Delta, entering
into code-sharing arrangements with certain other carriers, entering into
multiple connection agreements and entering into certain other commercial
arrangements. A representative of Shearman & Sterling reviewed with the
directors the legal standards applicable to their deliberation and the terms of
the draft Merger Agreement, and Morgan Stanley reviewed its financial analysis
of the proposed transaction and expressed its oral opinion (subsequently
confirmed in writing) that, as of that date and based on and subject to the
matters discussed at the board meeting, the consideration to be received by
Comair's shareholders pursuant to the draft Merger Agreement was fair, from a
financial point of view, to such shareholders (other than Delta and its
affiliates). The Comair Board unanimously approved the proposed transaction on
the terms under consideration. On October 17, 1999, Morgan Stanley delivered
its written opinion confirming its oral opinion.
At a meeting held on the morning on October 17, 1999, Delta's Board of
Directors heard presentations from Delta's management and legal advisors
regarding the proposed transaction. Management reported that an acquisition of
Comair would enable Delta to realize revenue gains from factors such as market
growth, more efficient operations, integrated revenue management and better
utilization of aircraft at both airlines. The Delta Board unanimously approved
the proposed acquisition on the terms under consideration.
The Merger Agreement was signed that evening and the transaction was
announced on the morning of October 18, 1999.
Recommendation of the Comair Board; Fairness of the Offer and the Merger
(a) Recommendation of the Board of Directors.
AT A MEETING OF THE BOARD OF DIRECTORS ON OCTOBER 16, 1999, THE COMAIR
BOARD UNANIMOUSLY APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO, AND IN THE BEST INTERESTS OF,
COMAIR AND THE HOLDERS OF SHARES. THE COMAIR BOARD RECOMMENDS THAT COMAIR'S
SHAREHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES PURSUANT TO THE OFFER AND
APPROVE AND ADOPT THE MERGER AGREEMENT.
(b) Reasons for the Recommendation of the Board of Directors.
In approving the Merger Agreement and the transactions contemplated
thereby, and recommending that holders of Shares accept the Offer and tender
their Shares pursuant to the Offer, the Comair Board considered a number of
factors, including, but not limited to, the following:
7
<PAGE>
(i) The familiarity of the Comair Board with the financial condition,
results of operations, business and prospects of Comair (as reflected in
Comair's historical and projected financial information), current economic
and market conditions generally and in the airline industry specifically;
(ii) That Comair's financial condition, results of operations,
business and prospects are substantially affected or influenced by
Comair's relationship with Delta and Comair's role as a Delta Connection
carrier and that the Delta Connection Agreement terminates on October 31,
1999;
(iii) That, based upon discussions between Delta and Comair's
management as part of the negotiations for the renewal of the Delta
Connection Agreement, management's conclusion that the terms of any such
renewal would substantially reduce Comair's net income from the net income
of Comair previously projected by management;
(iv) That Delta had proposed other changes to its commercial
relationship with Comair, the effect of which management could not readily
quantify but which management believed could adversely affect further the
future financial performance of Comair;
(v) That the $23.50 per Share in cash to be paid in the Offer and
Merger would represent a significant premium to the price at which the
Shares would likely trade if the Delta Connection Agreement provisions
that were under discussion became effective;
(vi) A review by management of a range of alternative strategies that
might be pursued in the event that the Delta Connection Agreement were not
to be renewed, the possible values that might be achieved through those
strategies, and the Comair Board's conclusion that these alternative
strategies entail substantial risk and, in any event, that none of these
alternative strategies are likely to result in greater value to Comair or
its shareholders than the Offer and the Merger.
(vii) The opinion of Comair's financial advisor, Morgan Stanley & Co.
Incorporated ("Morgan Stanley"), that as of the date of such opinion, the
$23.50 per Share to be offered to the shareholders of Comair pursuant to
the Merger Agreement is fair from a financial point of view to such
shareholders (other than Delta and its affiliates) (see "Special
Factors--Opinion of the Financial Advisor to the Comair Board");
(viii) The fact that the Merger Agreement provides for a first-step
cash tender offer for all outstanding Shares thereby enabling shareholders
who tender their Shares to receive promptly $23.50 per Share in cash, and
that shareholders who do not tender their Shares will receive the same
cash price in the subsequent merger;
(ix) A review of other transactions that could be pursued as possible
alternatives to the Offer and the Merger, the range of possible benefits
and risks to the shareholders of such alternatives, the timing and
likelihood of accomplishing any such alternatives, and the effect of
Delta's ownership of approximately 22% of the Shares and commercial
relationship with Comair on Comair's ability to pursue any of these
alternatives;
(x) The likelihood that the Offer and the Merger will be consummated,
including the fact that the obligations of Delta and Kentucky Sub are not
conditioned upon Kentucky Sub obtaining any financing; and
(xi) The terms and conditions of the Offer, the Merger and the Merger
Agreement, including the fact that the Merger Agreement does not preclude
the Comair Board from considering other bids that the Comair Board has
determined on the terms of such proposal, including the proposed
consideration per Share, to be a Superior Proposal, and the Comair Board's
right to terminate the Merger Agreement in order to enter into a Superior
Proposal upon the payment of $50 million.
The foregoing discussion of the information and factors considered and
given weight by the Comair Board is not intended to be exhaustive. In view of
the variety of factors considered in connection with its evaluation of the
Offer and the Merger Agreement, the Comair Board did not find it practicable
to, and did not, quantify or otherwise assign relative weights to the specific
factors considered in reaching its determination. In addition, individual
members of the
8
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Comair Board may have given different weights to different factors. In light of
the nature of Comair's business, Comair did not deem net book value or
liquidation value to be relevant indicators of the value of the Shares.
Opinion of Financial Advisor to the Comair Board
Comair retained Morgan Stanley to act as its financial advisor in
connection with the Offer and the Merger and related matters based upon Morgan
Stanley's qualifications, expertise and reputation. On October 16, 1999, Morgan
Stanley delivered its oral opinion to the Comair Board that, as of such date
and based upon the procedures and subject to the assumptions and qualifications
described to the Comair Board and later set forth in the written opinion of
Morgan Stanley dated October 17, 1999, the consideration to be received by the
holders of Shares pursuant to the Merger Agreement was fair from a financial
point of view to such holders (other than Delta and its affiliates).
The full text of Morgan Stanley's written opinion dated as of October 17,
1999, which sets forth, among other things, assumptions made, matters
considered, and scope and limitations on the review undertaken (the "Morgan
Stanley Opinion"), is attached as Exhibit (b)(1) to the Schedule 13E-3 (as
defined below) and is incorporated herein by reference. Holders of Shares are
urged to, and should, read the Morgan Stanley Opinion carefully and in its
entirety. The Morgan Stanley Opinion is directed to the Comair Board and
addresses the fairness of the consideration, from a financial point of view, to
the holders of Shares (other than Delta and its affiliates) pursuant to the
Merger Agreement and it does not address any other aspect of the Merger nor
does it constitute a recommendation as to whether or not holders of Shares
should participate in the Offer. The summary of the Morgan Stanley Opinion set
forth in this Offer to Purchase is qualified in its entirety by reference to
the full text of such opinion.
In arriving at its opinion, Morgan Stanley (i) reviewed certain publicly
available financial statements and other information of Comair; (ii) reviewed
certain internal financial statements and other financial and operating data
concerning Comair prepared by the management of Comair; (iii) reviewed certain
financial projections prepared by the management of Comair; (iv) discussed the
past and current operations and financial condition and the prospects of
Comair, including Comair's expected future relationship with Delta, with senior
executives of Comair; (v) reviewed the reported prices and trading activity for
the Shares; (vi) compared the financial performance of Comair and the prices
and trading activity of the Shares with that of certain other comparable
publicly-traded companies and their securities; (vii) reviewed the financial
terms, to the extent publicly available, of certain comparable acquisition
transactions; (viii) participated in discussions and negotiations among
representatives of Comair and Delta and their financial and legal advisors;
(ix) reviewed the draft Merger Agreement and certain related documents; and (x)
performed such other analyses and considered such other factors as Morgan
Stanley deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed by Morgan Stanley for the purposes of the Morgan Stanley Opinion. With
respect to the financial projections, Morgan Stanley assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of Comair. In addition,
Morgan Stanley assumed that the Offer and the Merger would be consummated on
the terms set forth in the Merger Agreement. Morgan Stanley did not make any
independent valuation or appraisal of the assets or liabilities of Comair, nor
was Morgan Stanley furnished with any such appraisals. The Morgan Stanley
Opinion was necessarily based on economic, market and other conditions as in
effect on, and the information made available to Morgan Stanley as of, the date
of the Morgan Stanley Opinion.
In arriving at its opinion, Morgan Stanley was not authorized to solicit,
and did not solicit, interest from any party, nor did it have discussions with
any party other than Delta with respect to the acquisition of Comair or any of
its assets.
Below is a brief summary of certain analyses performed by Morgan Stanley
and reviewed with the Comair Board on October 16, 1999, in connection with the
preparation of the Morgan Stanley Opinion and with its oral presentation to the
Comair Board on such date. Certain of these summaries of financial analyses
include information presented in tabular format. In order to fully understand
the financial analyses of Morgan Stanley, the tables must be read together with
the text of each summary. These tables alone do not constitute a complete
description of Morgan Stanley's financial analysis. The current unaffected
market price of the Shares was not an appropriate means of valuation because
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<PAGE>
it did not reflect the impact of the Revised Projections and, consequently,
Morgan Stanley based its analyses on the Revised Projections. The Revised
Projections are set out in the Schedule 14D-9 being mailed to Comair
shareholders herewith.
Comparable Public Company Analysis
As part of its analysis, Morgan Stanley compared certain financial
information of Comair with corresponding publicly available information of a
group of four publicly-traded regional airline companies that Morgan Stanley
considered comparable in certain respects with Comair (the "Comparable Public
Companies"), which group included: Mesa Air Group, Inc.; Atlantic Coast
Airlines Holdings, Inc.; SkyWest, Inc.; and Mesaba Holdings, Inc.
Morgan Stanley analyzed the profitability of the Revised Projections
versus the profitability of Comparable Public Companies. The profitability
measure used was operating income as a percent of sales.
<TABLE>
Revised Projections Versus Profitability of Comparable Public Companies
-----------------------------------------------------------------------
Comparable Companies vs. Comparable Companies vs.
Companies Comair Blended 2001 Margin Comair Blended 2003 Margin
- ---------------------------------------- -------------------------- --------------------------
<S> <C> <C>
Comair Proposal......................... 25.5% 23.5%
Delta Current Proposal.................. 14.2% 13.5%
Intermediate Proposal................... 15.4% 15.2%
Alternative Business Plan............... 12.6% 13.5%
Atlantic Coast Airlines
Holdings, Inc........................ 16.7% 16.7%
Mesa Air Group, Inc..................... 8.7% 8.7%
Sky West, Inc........................... 17.0% 17.0%
Mesaba Holdings, Inc.................... 10.2% 10.2%
</TABLE>
Morgan Stanley then analyzed the relative performance of Comair by
comparing certain market trading statistics for Comair with those of the
Comparable Public Companies. The market trading information used in ratios
provided below is as of October 15, 1999. The market trading information used
in the valuation analysis was (i) market price to estimated earnings per share
for 1999, (ii) market price to estimated earnings per share for 2000, (iii)
projected earnings growth and (iv) market price to estimated earnings per share
for 2000 divided by projected earnings growth. Earnings per share and projected
growth estimates for Comair and the Comparable Public Companies were based on
median IBES estimates as of October 15, 1999. An analysis of the multiples for
the Comparable Public Companies yielded the following:
<TABLE>
1999 2000 Projected 5-Year Price/Earnings
Company Price/Earnings Price/Earnings EPS Growth to Growth
- ----------------------------------- -------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Comair............................. 12.1x 10.6x 17% 0.62x
Atlantic Coast Airlines
Holdings, Inc................... 15.0x 10.4x 17% 0.62x
Mesa Air Group, Inc................ 9.0x 7.1x 13% 0.55x
Sky West, Inc...................... 10.7x 9.2x 17% 0.54x
Mesaba Holdings, Inc............... 7.1x 6.1x 18% 0.34x
</TABLE>
Based on the foregoing analysis, Morgan Stanley applied multiples of 7x to
11x to 2000 estimated earnings of Comair based on the Revised Projections, and
calculated ranges of implied equity share values as follows:
10
<PAGE>
<TABLE>
Trading Valuation
----------------- Equity Value
------------------------------------------
Multiple Range Aggregate Per Share
2000E ---------------- ------------------- --------------------
CY Earnings(1) Low High Low High Low High
------------ ---- ----- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Comair Proposal................. $ 1.69 7.0x 11.0x $ 1,163 $ 1,827 $ 11.81 $ 18.57
Intermediate Proposal........... $ 0.89 7.0x 11.0x $ 605 $ 951 $ 6.20 $ 9.75
Delta Current Proposal ......... $ 0.71 7.0x 11.0x $ 488 $ 767 $ 4.96 $ 7.80
Alternative Business Plan....... $ 0.83 7.0x 11.0x $ 571 $ 898 $ 5.81 $ 9.12
- -------------------
(1) Based on Management Projections.
</TABLE>
Discounted stock price analysis
Morgan Stanley applied a range of earnings multiples based on the
Comparable Public Companies analysis to projected year 2003 earnings for each
of the Revised Projections, to imply a future stock price for Comair. The
implied future stock price from this analysis was then discounted to its
present value based on a range of discount rates representing the estimated
cost of equity for Comair. As set forth in the chart below, such analysis,
using a multiple range of 7x to 11x and a discount rate of 13% to 15%, yielded
(i) a per share equity value of $11.45 to $18.96 for the Comair Proposal, (ii)
a per share equity value of $7.04 - $11.66 for the Adjusted Delta Proposal,
(iii) a per share equity value of $4.99 - $8.26 for the Delta Current Proposal,
and (iv) a per share equity value of $6.71 - $11.11 for the Alternative
Business Plan.
No company utilized in the Comparable Public Companies analysis as a
comparison is identical to Comair. In evaluating the Comparable Public
Companies, Morgan Stanley made judgments and assumptions with regard to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Comair,
such as the impact of competition on the business of Comair and the industry
generally, industry growth and the absence of any material adverse change in
the financial condition and prospects of Comair or the industry or the
financial markets in general. Mathematical analyses, such as determining the
average or median, is not in itself a meaningful method of using Comparable
Public Company data.
<TABLE>
Discounted Stock Price Analysis(2)
---------------------------------- Equity Value
------------------------------------------
Multiple Range Aggregate Per Share
2000E ---------------- ------------------- --------------------
CY Earnings(1) Low High Low High Low High
------------ ---- ----- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Comair Proposal...................$ 2.49 7.0x 11.0x $ 1,127 $ 1,866 $ 11.45 $ 18.96
Intermediate Proposal.............$ 1.53 7.0x 11.0x $ 693 $ 1,147 $ 7.04 $ 11.66
$elta Current Proposal ...........$ 1.08 7.0x 11.0x $ 491 $ 813 $ 4.99 $ 8.26
Alternative Business Plan.........$ 1.46 7.0x 11.0x $ 660 $ 1,093 $ 6.71 $ 11.11
- -------------------
(1) Based on Management Projections.
(2) Pro Forma 2003 share price discounted at 13.0% to 15.0%.
Precedent Transaction Premiums Analysis
</TABLE>
Using publicly available information, Morgan Stanley performed an analysis
of two precedent transactions in the regional air carrier business segments
that Morgan Stanley deemed comparable to the Offer and the Merger. The two
transactions were (acquiror/acquiree): American Airlines, Inc./Reno Air, Inc.
and Mesa Air Group Inc./CCAir, Inc. Morgan Stanley calculated that the premium
to unaffected stock price in the American Airlines, Inc./Reno Air, Inc. and
Mesa Air Group Inc./CCAir, Inc. transactions was 51.9% and 24.4%, respectively,
with a mean of 38.2% and a median of 38.2%. After combining the results of the
above transactions with data from Securities Data Corporation indicating that
the mean and medium premiums paid in certain "going private" transactions
during the past five years was 37.4%
11
<PAGE>
and 31.8%, respectively, Morgan Stanley calculated a range of implied share
values based on a range of premiums from 30% to 40% applied to the values
derived from the Comparable Public Company analysis set forth above:
<TABLE>
Precedent Premiums Paid
----------------------- Equity Value
------------------------------------------
Premium Range Aggregate Per Share
Current -------------- ------------------- -------------------
Price(1) Low High Low High Low High
------------------- ----- ----- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Comair Proposal............... $ 11.81 $ 18.57 30.0% 40.0% $ 1,511 $ 2,558 $ 15.36 $ 25.99
Intermediate Proposal......... $ 6.20 $ 9.75 30.0% 40.0% $ 786 $ 1,331 $ 8.07 $ 13.65
Delta Current Proposal ....... $ 4.96 $ 7.80 30.0% 40.0% $ 635 $ 1,074 $ 6.45 $ 10.92
Alternative Business Plan..... $ 5.81 $ 9.12 30.0% 40.0% $ 743 $ 1,257 $ 7.55 $ 12.77
- -------------------
(1) Implied trading valuation price.
Precedent Transaction Multiples Analysis
</TABLE>
Using publicly available information, Morgan Stanley performed an analysis
of the precedent acquisition of ASA by Delta. Applying the multiples of
earnings paid in this transaction to the expected earnings in the Delta Current
Proposal, the Adjusted Delta Proposal and analysts' expected earnings for
Comair as compiled by IBES resulted in a range of values for Comair of $16.94
to $21.96.
No transaction utilized in the precedent transactions analysis as a
comparison is identical to the merger. In evaluating the precedent
transactions, Morgan Stanley made judgments and assumptions with regard to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Comair,
such as the impact of competition on the business of Comair and the industry
generally, industry growth and the absence of any material adverse change in
the financial condition and prospects of Comair or the industry or in the
financial markets in general. Mathematical analyses, such as determining the
average or median, is not in itself a meaningful method of using precedent
transactions data.
Discounted Cash Flow Analysis
Morgan Stanley performed a discounted cash flow analysis of Comair for the
fiscal years ended 2000 through 2004 based on the Revised Projections.
Unlevered free cash flows of Comair were calculated as net income plus
depreciation and amortization plus deferred taxes plus other non-cash expenses
plus after-tax net interest expense less capital expenditures less investment
in working capital. Morgan Stanley calculated terminal values by applying a
range of multiples to operating income in fiscal 2004 from 6x to 8x,
representing estimated current market trading multiples for regional airlines.
The unlevered cash flow streams and terminal values were then discounted to the
present using a range of discount rates from 11% to 13%, representing an
estimated weighted average cost of capital range for Comair. The discounted
values representing the aggregate values were then adjusted by adding cash and
subtracting debt to arrive at implied equity values. Based on this analysis,
Morgan Stanley calculated implied per share equity values for Comair of:
<TABLE>
Discounted Cash Flow Analysis(1)
---------------------------------- Equity Value
------------------------------------------
WACC Multiple Range Aggregate Per Share
------------- ---------------- ------------------- --------------------
Low High Low High Low High Low High
------------ ---- ----- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Comair Proposal............... 11.0% 13.0% 6.0x 8.0x $ 2,119 $ 2,708 $ 21.20 $ 27.09
Intermediate Proposal......... 11.0% 13.0% 6.0x 8.0x $ 1,465 $ 1,860 $ 14.66 $ 18.61
Delta Current Proposal ....... 11.0% 13.0% 6.0x 8.0x $ 1,004 $ 1,259 $ 10.04 $ 12.60
Alternative Business Plan..... 11.0% 13.0% 6.0x 8.0x $ 1,215 $ 1,563 $ 12.15 $ 15.64
- -------------------
(1) Based on discount rates of 11.0% to 13.0%.
</TABLE>
12
<PAGE>
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all its
analysis as a whole and did not attribute any particular weight to any analysis
or factor considered by it. Morgan Stanley believes that selecting any portion
of Morgan Stanley's analyses, without considering all analyses, would create an
incomplete view of the process underlying its opinion. In addition, Morgan
Stanley may have given various analyses and factors more or less weight than
other analyses or factors and may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of valuations resulting for
any particular analysis described above should not be taken to be Morgan
Stanley's view of the actual value of Comair.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Comair. The analyses
performed by Morgan Stanley are not necessarily indicative of actual value,
which may be significantly more or less favorable than suggested by such
analyses. Such analyses were performed solely as part of Morgan Stanley's
analysis of whether the consideration to be received by the holders of Shares
pursuant to the Merger Agreement was fair from a financial point of view to
such holders (other than Delta and its affiliates), and were conducted in
connection with the delivery of the Morgan Stanley Opinion to the Comair Board.
The analyses do not purport to be appraisals or to reflect the prices at which
Comair might actually be sold.
As described above, the Morgan Stanley Opinion provided to the Comair
Board was one of a number of factors taken into consideration by Comair Board
in making its determination to recommend adoption of the Merger Agreement and
the transactions contemplated thereby. Consequently, the Morgan Stanley
analyses described above should not be viewed as determinative of the opinion
of the Comair Board or the view of the management with respect to the value of
Comair.
The consideration to be received by the holders of Shares pursuant to the
Merger Agreement was determined through negotiations between Comair and Delta
and was approved by the entire Comair Board.
The Comair Board retained Morgan Stanley based upon its experience and
expertise. Morgan Stanley is an internationally recognized investment banking
and advisory firm. As part of its investment banking business, Morgan Stanley
is regularly engaged in the valuation of business and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuation for estate, corporate and other purposes. Morgan Stanley has
advised Comair that, in the ordinary course of its business, Morgan Stanley and
its affiliates may actively trade the debt and equity securities or senior
loans of Comair and Delta for their own account and for the accounts of
customers and, accordingly, may at any time hold a long or short term position
in such securities. In the past, Morgan Stanley has provided investment banking
services to Delta unrelated to the Offer and Merger, for which services Morgan
Stanley has received compensation. In December 1998, Morgan Stanley acted as
agent in connection with a private placement of Delta notes for which Delta
paid Morgan Stanley a fee not in excess of $200,000, and such fee was the only
fee paid by Delta to Morgan Stanley in 1998. In July 1999, Morgan Stanley acted
as one of two "joint bookrunners" for Delta's public offering of $537.5 million
principal amount of 8 1/8% Notes due July 1, 2039. Also in July 1999, Morgan
Stanley acted as solicitation agent for a consent solicitation by Delta in
respect of certain privately held debt securities; Delta paid Morgan Stanley a
fee of $500,000 for serving in this capacity. Morgan Stanley and its affiliates
may maintain relationships with Comair and Delta in the future.
Pursuant to a letter agreement between Comair and Morgan Stanley, dated
September 23, 1999, Comair has agreed to pay Morgan Stanley: (A) if no Merger
Agreement is entered into, an "Advisory Fee" calculated depending upon the
amount of time spent on assignments, or (B) if the Offer is consummated, a
"Transaction Fee" equal to $10,000,000 against which any Advisory Fee will be
credited. The full amount of the Transaction Fee is to be paid by Comair when
control of 50% or more of the Shares changes hands. In addition to any fees for
professional services, Morgan Stanley will also be reimbursed for expenses
incurred in connection with Morgan Stanley's representation of Comair. Comair
has also agreed to indemnify Morgan Stanley and its affiliates against certain
liabilities, including liabilities under the federal securities laws, related
to, arising out of or in connection with the engagement of Morgan Stanley by
Comair.
13
<PAGE>
The foregoing summary does not purport to be a complete description of the
analyses performed by Morgan Stanley and is qualified by reference to the
Morgan Stanley Opinion attached as Exhibit (b)(1) to the Schedule 13E-3 and
attached as Schedule II to the Schedule 14D-9 being mailed to Comair
shareholders herewith.
Copies of the Morgan Stanley Opinion are available for inspection and
copying at the principal executive offices of Comair during regular business
hours by any shareholder of Comair, or a shareholder's representative who has
been so designated in writing.
Position of Delta, Kentucky Sub and Delta Holdings Regarding Fairness of the
Offer and the Merger
Delta and Kentucky Sub believe that the consideration to be received by
Comair's shareholders pursuant to the Offer and the Merger is fair to such
shareholders. Delta and Kentucky Sub base their belief on the following facts:
(i) the fact that the Comair Board concluded that the Offer and the
Merger are fair to, and in the best interests of, Comair and Comair's
shareholders (other than Delta and its affiliates);
(ii) notwithstanding the fact that Morgan Stanley's opinion was
addressed to the Comair Board and that neither Delta nor Kentucky Sub is
entitled to rely on such opinion, the fact that the Comair Board received
an opinion from Morgan Stanley that, as of the date of such opinion and
based on and subject to certain matters stated in such opinion, the
consideration to be received by the holders of Shares pursuant to the
Merger Agreement is fair from a financial point of view to such holders
(other than Delta and its affiliates);
(iii) the long-term value and prospects of Comair given the fact that
the existing marketing arrangements between Delta and Comair expire on
October 31, 1999, and are hence subject to renegotiation. Delta believes
that the terms of such existing marketing arrangements, undercompensate
Delta and overcompensate Comair and are inconsistent with the current
market environment, including the terms of recent agreements between Delta
and certain other Delta Connection carriers;
(iv) the fact that the Offer constitutes an approximately 31% premium
over the closing market price of Comair's Shares on October 15, 1999, the
business day immediately prior to the date on which the Offer was
announced;
(v) the fact that the same consideration will be paid in both the
Offer and the Merger;
(vi) the fact that the Offer and the Merger will each provide
consideration to Comair's shareholders entirely in cash;
(vii) the fact that, because of the current marketing alliance
between Delta and Comair pursuant to the Delta Connection Agreement,
Comair has a higher value to Delta than for any other potential bidder;
and
(viii) the terms and conditions of the Offer, the Merger and the
Merger Agreement, including the fact that the Merger Agreement does not
preclude the Comair Board from considering other bids that the Comair
Board has determined, based on the terms of such proposal, including the
proposed consideration per Share, to be a Superior Proposal (as defined
below), and the Comair Board's right to terminate the Merger Agreement in
order to enter into a Superior Proposal upon the payment of a $50 million
termination fee.
Delta and Kentucky Sub did not find it practicable to assign, nor did they
assign, relative weights to the individual factors considered in reaching its
conclusion as to fairness. In light of the nature of Comair's business, Delta
and Kentucky Sub did not deem net book value or liquidation value to be
relevant indicators of the value of the Shares.
14
<PAGE>
Purpose and Structure of the Offer and the Merger; Reasons of Delta for the
Offer and the Merger
The purpose of the Offer and the Merger is for Delta to increase Delta's
ownership of Comair from approximately 22.06% to 100%. Upon consummation of the
Merger, Comair will become an indirect, wholly owned subsidiary of Delta. The
acquisition of the Shares not owned by Delta and its affiliates has been
structured as a cash tender offer followed by a cash merger so as to effect a
prompt and orderly transfer of ownership of Comair from Comair's public
shareholders to Delta and Kentucky Sub, and so as to provide such shareholders
with cash for all of their Shares.
Under the KBCA and Comair's Articles of Incorporation, the approval of the
Comair Board and the affirmative vote of the holders of at least two-thirds of
the issued and outstanding Shares are required to approve and adopt the Merger
Agreement and the transactions contemplated thereby, including the Merger. The
Comair Board has approved and adopted the Merger Agreement and the transactions
contemplated thereby, and the only remaining required corporate action of
Comair is the approval and adoption of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of at
least two-thirds of the issued and outstanding Shares. Unless it is no longer
required to do so under the KBCA, Comair has agreed to cause a meeting of its
shareholders as soon as reasonably practicable after consummation of the Offer
for the purpose of voting on the approval and adoption of the Merger and the
Merger Agreement. If Delta and its affiliates own at least two-thirds of the
outstanding Shares as a result of the Offer or otherwise, Delta would have
sufficient voting power to and would approve the Merger without the affirmative
vote of any other shareholder of Comair. Delta Holdings and Kentucky Sub have
agreed to vote their Shares in favor of the Merger.
Delta has decided to acquire Comair at this time (1) to improve customer
service by more closely integrating Comair's operations into Delta's national
Delta Connection carrier network and linking local markets with Delta's
domestic and international route systems; (2) to enhance Delta's competitive
position with respect to regional jets; (3) to support the growth of Delta's
mainline flying by bringing more customers into Delta hubs and permitting Delta
jets to be used more effectively in Delta's network; and (4) to strengthen
Delta's financial performance. Delta believes the acquisition will generate
revenue benefits from more efficient operations, market growth, integrated
revenue management and better utilization of aircraft at both airlines.
Plans for Comair After the Offer and the Merger
Pursuant to the Merger Agreement, upon completion of the Offer, Delta and
Kentucky Sub intend to effect the Merger in accordance with the terms of the
Merger Agreement. See "Special Factors--The Merger Agreement."
The Merger Agreement provides that, effective upon the consummation of the
Offer, Delta will be entitled to designate a number of directors (rounded up to
the next whole number) to the Comair Board in proportion to the percentage of
the total number of outstanding Shares of Comair owned by Delta and its
affiliates. It also provides that Comair shall use its reasonable best efforts
to cause at least two persons who are not officers or employees of Comair or
affiliated or associated with Delta or Kentucky Sub to be members of the Comair
Board until such time as the Merger is consummated.
After the Merger, it is expected that David A. Siebenburgen, who is
currently President and Chief Operating Officer of Comair, will lead the Delta
Connection network with responsibility for Comair and ASA operations. Delta
plans that Comair and ASA will operate separately.
Except as otherwise described in this Offer to Purchase and except for the
transactions contemplated by the Merger Agreement, Delta has no current plans
or proposals which relate to or would result in: (a) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving Comair
or any of its subsidiaries; (b) a sale or transfer of a material amount of
assets of Comair or any of its subsidiaries; (c) any change in the management
of Comair or any change in any material term of the employment contract of any
executive officer; or (d) any other material change in Comair's corporate
structure or business.
Nevertheless, Delta may initiate a review of Comair and its assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel to determine what changes, if any, would be desirable
following the
15
<PAGE>
Merger in order best to organize and coordinate the activities of Comair and
Delta. Furthermore, in connection with its ongoing review of its long term
strategy with respect to the utilization of regional jets in Delta's route
network, Delta may, in the future, consider transactions such as the
disposition or acquisition of material assets, alliances, joint ventures, other
forms of co-operation with third parties or other extraordinary transactions
affecting Comair or its operations.
Rights of Shareholders in the Offer and the Merger
Dissenter's rights are not available in connection with the Offer.
However, if the Merger is consummated, shareholders of Comair may have certain
rights under Kentucky law to dissent and demand payment in cash of the fair
value of their Shares. If the statutory procedures for asserting dissenters'
rights, which would be provided to all shareholders entitled to assert such
rights, were complied with, such rights could lead to a judicial determination
of the fair value (excluding any appreciation or depreciation in anticipation
of the Merger unless exclusion would be inequitable) required to be paid in
cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the consideration received in the Offer or the
market value of the Shares, including net asset values and the investment or
earnings value of the Shares. The value so determined could be more than, the
same as, or less than the consideration received per Share pursuant to the
Offer or the consideration per Share to be received in the Merger. Under
Kentucky law, the right to dissent and demand payment for the fair value of
their shares is the remedy ordinarily available to minority shareholders in a
cash-out merger. However, a damages remedy may be available if the Merger
involved illegality or fraud.
The foregoing summary of the rights of shareholders does not purport to be
a complete statement of the procedures to be followed by shareholders desiring
to exercise any available dissenters' rights. The preservation and exercise of
dissenters' rights require strict adherence to the applicable provisions of the
KBCA, which appear as Exhibit (e) to the Schedule 13E-3, and which are
incorporated herein by reference thereto. Failure to follow the procedures set
forth in such provisions may result in a loss of such rights.
The foregoing description of certain provisions of the KBCA is not
necessarily complete and is qualified in its entirety by reference to the KBCA.
The Merger Agreement
The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to Delta's Amendment No. 3 to
Schedule 13D filed with the Commission on October 18, 1999. The summary is
qualified in its entirety by reference to the Merger Agreement, which is
incorporated herein by reference thereto.
Shareholders are urged to read the Merger Agreement in its entirety.
The Offer
The Merger Agreement provides for the commencement of the Offer as
promptly as practicable after October 17, 1999, but in no event later than
October 22, 1999. The Merger Agreement also provides that the obligation of
Kentucky Sub to accept for payment and pay for Shares tendered pursuant to the
Offer is subject to the satisfaction or waiver of the Minimum Condition and
certain other conditions that are described in "The Tender Offer--Certain
Conditions of the Offer." Pursuant to the Merger Agreement, Kentucky Sub
generally has the right to waive any condition to the Offer and to make any
change in the terms or conditions of the Offer. However, Kentucky Sub may not
waive the Minimum Condition without the prior written consent of Comair and may
not make any change in the Offer which changes the form of consideration to be
paid, decreases the price per Share or the number of Shares sought in the
Offer, imposes conditions to the Offer in addition to those set forth in "The
Tender Offer--Certain Conditions of the Offer," amends the terms or conditions
of the Offer in a manner adverse to Comair or to the holders of Shares or,
except as provided in the next sentence, extends the Offer. However, Kentucky
Sub may, without the consent of Comair, (i) extend the Offer beyond the
scheduled expiration date (the initial scheduled expiration date is November
19, 1999) if on any scheduled expiration date of the Offer any conditions to
the Offer shall not have been satisfied or waived or (ii) extend the Offer for
any period required by any rule, regulation or interpretation of the Commission
or any period required by applicable law. Furthermore, for so long as the
Merger Agreement is in effect and the applicable waiting
16
<PAGE>
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), has not expired, Kentucky Sub will extend the Offer
from time to time for a period or successive periods not to exceed ten business
days each after the previously scheduled expiration date of the Offer.
The Merger Agreement also provides that, effective upon the acceptance for
payment by Kentucky Sub of any Shares pursuant to the Offer, Delta will be
entitled to designate the number of directors, rounded up to the next whole
number, on the Comair Board that equals the product of (i) the total number of
directors on the Comair Board (giving effect to the election of any additional
directors pursuant to this provision), multiplied by (ii) the percentage that
the number of Shares beneficially owned by Delta (including Shares accepted for
payment) bears to the total number of Shares outstanding. In furtherance
thereof, Comair will take all action necessary to cause Delta's designees to be
elected or appointed to the Comair Board, including, without limitation,
increasing the number of directors and seeking and accepting resignations of
incumbent directors. At such time, Comair will also use its best efforts to
cause individuals designated by Delta to constitute the same percentage as such
individuals represent on the Comair Board of (i) each committee of the Board
and (ii) each board of directors (and committee thereof) of each subsidiary of
Comair. Notwithstanding the foregoing, until the Effective Time, Comair will
use its reasonable best efforts to cause at least two persons who are not
officers or employees of Comair or affiliated or associated with Delta or
Kentucky Sub (the "Independent Directors") to be members of the Comair Board.
The Merger
The Merger Agreement provides that as promptly as practicable after all
conditions to the Merger set forth therein have been satisfied or, to the
extent permitted thereunder, waived, Kentucky Sub will be merged with and into
Comair in accordance with the KBCA. As a result of the Merger, the separate
existence of Kentucky Sub will cease and Comair will continue as the Surviving
Company. At the Effective Time, each Share outstanding immediately prior to the
Effective Time (other than Shares held in the treasury of Comair, Shares owned
by Delta and its affiliates or Shares as to which dissenters' rights have been
exercised) will be converted into the right to receive the Merger
Consideration.
Stock Options
At the Effective Time, each option to purchase Shares outstanding under
(x) the 1990 Stock Option Plan, (y) the 1992 Directors' Stock Option Plan and
(z) the 1998 Stock Option Plan of Comair that is vested and exercisable
(including any option that becomes vested and exercisable by its terms as a
result of the transactions contemplated in the Merger Agreement) shall be
canceled, and Delta shall pay each such holder in cash at or promptly after the
Effective Time for each such option an amount in cash determined by multiplying
(i) the excess, if any, of the amount of the Merger Consideration over the
applicable per Share exercise price of such option by (ii) the number of Shares
to which such option relates.
Representations and Warranties
The Merger Agreement contains various customary representations and
warranties of the parties thereto, including, without limitation,
representations (i) by Comair, Delta and Kentucky Sub as to their respective
corporate status, the authorization and the enforceability of the Merger
Agreement against each such party, the information to be provided by each such
party for inclusion in Commission filings related to the Offer and the Merger,
finders' fees and noncontravention and (ii) by Comair as to its capitalization,
its subsidiaries, the accuracy of its financial statements and filings with the
Commission, compliance with laws, the absence of undisclosed material
liabilities, the absence of certain changes or events concerning Comair's
business from March 31, 1999, the absence of material litigation, certain tax
matters, certain employee benefit and pension plan matters, certain
environmental matters, assets, certain labor matters, insurance, the
inapplicability of Kentucky anti-takeover statutes, year 2000 readiness and the
identification of and absence of material adverse changes with respect to its
material contracts. The representations and warranties contained in the Merger
Agreement will not survive the Effective Time.
17
<PAGE>
Covenants
The Merger Agreement contains various customary covenants of the parties
thereto. A description of certain of these covenants follows:
Conduct of Business. Pursuant to the Merger Agreement, Comair has
agreed that, from October 17, 1999 until the Effective Time, Comair and
its subsidiaries will:
(i) conduct their businesses as in the ordinary course
consistent with past practice and will use reasonable best efforts to
preserve intact their business organizations and relationships with
third parties and to keep available the services of their present
officers and employees;
(ii) use all reasonable efforts to keep all material property
and equipment useful and necessary in its business in good working
order and condition;
(iii) continue, in respect of all aircraft, engines and spare
parts intended for use in its operations, its maintenance programs
consistent with past practice (except as may be required by
applicable law), including using reasonable best efforts to keep all
such aircraft in such condition as may be necessary to enable the
airworthiness certification of such aircraft under the Federal
Aviation Act to be maintained in good standing at all times; and
(iv) maintain their existing insurance coverage of all types
(including but not limited to policies covering aviation, hull,
spaces, liability, war risk and property damage) in effect or procure
substantially similar substitute insurance policies with financially
sound and reputable insurance companies in at least such amounts and
against such risks as are currently covered by such policies.
Without limiting the generality of the foregoing, from October 17,
1999 until the Effective Time, Comair will not, and will cause its
subsidiaries not to:
(i) adopt or propose any change in their respective
organizational documents (including its charter or bylaws);
(ii) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other business
organization or division thereof, or sell, lease or otherwise dispose
of a material subsidiary or a material amount of assets or securities
(other than trade-ins or exchanges of Embraer aircraft in connection
with the acquisition of Canadair Regional Jet aircraft as permitted
under paragraph (xi) in the ordinary course of business consistent
with practice);
(iii) other than in the ordinary course of business consistent
with past practice, make, in one or a series of related transactions,
any investment, whether by purchase of stock or securities,
contributions to capital (other than contributions to capital of a
wholly-owned subsidiary) or any property transfer, or purchase for an
amount in excess of $250,000 in the aggregate, any property or assets
of any other person; provided that notwithstanding the foregoing,
Comair shall be permitted in the ordinary course of business to
engage in cash management by investing in cash equivalents or
otherwise in a manner consistent with the Comair Investment Company
Investment Guidelines as disclosed to Delta in writing.
(iv) (A) sell, trade, slide, lease, waive, release, grant or
transfer any routes or slots to which Comair had a right on October
17, 1999; provided that Comair or any of its subsidiaries may engage
in trades or slides of slots to another carrier in the ordinary
course of business consistent with past practice so long as any
substitute slot obtained in connection with such trade or slide shall
be as similar to the traded slot as possible, including but not
limited to, being within the same slot control period and having an
equal or better Federal Aviation Administration withdrawal priority
number; (B) use any slot at New York LaGuardia Airport ("LGA") or
Washington, D.C. Reagan National Airport ("DCA") for the provision of
essential air service as that term is defined in the Federal Aviation
Act; or (C) fail to use any LGA or DCA slot in accordance with
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Section 93.227 of the Federal Aviation Regulations, Part 93, Subpart
S, as amended, or any successor provision or regulation;
(v) license (as licensor), dispose of, assign, transfer or
encumber any material intellectual property;
(vi) except to refund or refinance commercial paper, incur,
assume or prepay an amount of long-term or short-term debt (including
leases, financings, general airport revenue bonds, special revenue
bonds and special facility bonds) in excess of $5,000,000 in the
aggregate, other than in the ordinary course of business consistent
with past practice in order to obtain financing in respect of the
acquisition of aircraft and engine equipment pursuant to existing
lease agreements or arrangements that have been provided to Delta
(including, without limitation, the exercise of existing options);
(vii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person (as defined below) (other than a
wholly-owned subsidiary) which are in excess of $250,000 in the
aggregate;
(viii) make any loans to any other Person or Persons (other than
a wholly-owned subsidiary);
(ix) authorize any new capital expenditures which individually
are in excess of $500,000 or in the aggregate are in excess of
$10,000,000, in either case other than (A) ordinary course capital
expenditures in connection with (1) engine overhauls, (2) increases
in inventory in connection with additions to Comair's regional jet
fleet and (3) acquisitions of equity interests in regional jet
aircraft pursuant to sale-leaseback transactions on terms consistent
with past practice and (B) as otherwise expressly permitted by
paragraphs (x) or (xi) below;
(x) without Delta's written consent, acquire, design, construct,
lease or otherwise contract for or assume any obligation with respect
to current, new or expansion real property, facilities or improvement
other than (A) those that could not reasonably be expected to have
capital costs in excess of $100,000 individually or $500,000 in the
aggregate and could not reasonably be expected to have annual rental
and maintenance costs in excess of $100,000 individually or $500,000
in the aggregate; (B) the construction of new headquarters and
maintenance facilities near the Greater Cincinnati/Northern Kentucky
International Airport as described to Delta in writing; and (C) the
Phase I improvements to Comair's passenger facilities at the Greater
Cincinnati/Northern Kentucky International Airport as described to
Delta in writing; provided that representatives of Delta and Comair
will meet as soon as practicable after October 17, 1999 (1) to review
the status of all projects covered by clauses (x)(A) through (C)
above (without giving effect to certain matters disclosed to Delta in
writing) that are at such time being implemented and (2) to consider
whether alterations to, or the termination of, such projects or any
commitments related thereto are appropriate, taking into account
Comair's operational needs and contractual obligations;
(xi) (A) acquire or lease (other than lease financings expressly
permitted under paragraph (vi) above) any aircraft other than
pursuant to contracts or agreements in effect as of October 17, 1999;
(B) exercise any options to acquire or lease any aircraft under
contracts and agreements in effect as of October 17, 1999; (C) enter
into, or commit to enter into, any new agreement or arrangement with
respect to the acquisition or lease of aircraft; (D) agree or commit
to accelerate the delivery of, or agree to materially delay or defer
the delivery of, aircraft for which contracts or commitments exist,
or exercise any right of substitution of different aircraft models
under any contract or arrangement; or (E) operate any aircraft
configured with an excess of 70 passenger seats; provided that Comair
shall take all reasonable steps to keep Delta informed regarding the
status of all acquisitions or leases of aircraft;
(xii) split, combine or reclassify any shares of their
respective shares of capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of their respective shares of
capital stock other than (A) cash dividends and distributions by a
wholly owned subsidiary of Comair to Comair or to another wholly
owned subsidiary of Comair, (B) a regular quarterly dividend not in
excess of $0.03 per Share, declared no earlier than January 1, 2000
and only in the
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event that Delta has not purchased Shares pursuant to the Offer by
such time, or (C) a dividend of or rights to purchase shares of
capital stock of Comair pursuant to a stockholders rights plan which,
by its terms, shall not apply to the Offer, the Merger or any other
transaction contemplated by the Merger Agreement, or redeem,
repurchase or otherwise acquire or offer to redeem, repurchase, or
otherwise acquire any of its securities or any securities of its
subsidiaries;
(xiii) enter into, terminate, cancel, or agree to any material
change in, any material license, lease, contract or agreement,
including without limitation any marketing, code sharing or other
similar agreement with any airline other than Delta;
(xiv) enter into any agreement or arrangement that limits or
otherwise restricts Comair or any of its affiliates or any successor
thereto or that could, after the Effective Time, limit or restrict
the Surviving Company, any subsidiary thereof or any of their
affiliates, from engaging or competing in any line of business or in
any location, which agreement or arrangement would be material to the
business of Comair or the business of Delta and Delta's subsidiaries
(assuming the Merger had taken place), in either case taken as a
whole;
(xv) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment consulting, transaction bonus, change in
control or employee benefit plan, agreement, trust, plan, fund or
other arrangement for the benefit and welfare of any current or
former director, officer, employee or consultant or (except for
normal increases in the ordinary course of business that are
consistent with past practices and that, in the aggregate (excluding
increases arising pursuant to any collective bargaining agreements
covering employees of Comair as of October 17, 1999) do not result in
a material increase in benefits or compensation expense to Comair)
increase in any manner the compensation or fringe benefits of any
current or former director, officer, employee or consultant or pay
any benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options or
stock appreciation rights or the removal of existing restrictions in
any benefit plans or agreements);
(xvi) other than as required by U.S. generally accepted
accounting principles, revalue in any material respect any of their
assets, including, without limitation, writing down the value of
inventory in any material manner or write-off notes or accounts
receivable in any material manner;
(xvii) pay, discharge or satisfy any material claims,
liabilities or obligations (whether absolute, accrued, asserted or
unasserted, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business,
consistent with past practices, of liabilities reflected or reserved
against in the consolidated balance sheet of Comair as of March 31,
1999 (and the notes thereto) or incurred in the ordinary course of
business, consistent with past practices;
(xviii) make any federal or material state tax election or
settle or compromise any material income tax liability controversy;
(xix) take any action other than in the ordinary course of
business and consistent with past practices with respect to
accounting policies or procedures or except as required by U.S.
generally accepted accounting principles or Regulation S-X under the
Exchange Act;
(xx) other than entering into side letters in respect of issues
under existing contracts or agreements with unions representing
employees of Comair or its subsidiaries in the ordinary course of
business consistent with past practice and not relating to pay,
benefits, scope of work, successorship, change of control, merger,
job protection and seniority integration, enter into or amend, or
agree to enter into or amend (in each case without the prior written
consent of Delta), any contract, agreement, or memorandum of
understanding with any unions representing employees of Comair or its
subsidiaries; it being understood and agreed that the Comair shall
take all reasonable steps to keep Delta informed regarding all
material developments with respect to the progress of any
negotiations between Comair and its subsidiaries and any such unions;
provided, however
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that nothing in the Merger Agreement shall prevent Comair from
bargaining in good faith with its unions, provided that any proposed
agreements are subject to Delta's written consent in order to become
binding on Comair or its subsidiaries; or
(xxi) agree or commit to do any of the foregoing.
Shareholder Meeting. Unless a shareholder vote is not required under the
KBCA, Comair will cause a meeting of its shareholders to be duly called and
held as soon as reasonably practicable following the consummation of the Offer
for the purpose of voting on the approval and adoption of the Merger Agreement
and the transactions contemplated thereby. In connection with such meeting,
Comair (i) will promptly prepare and file with the SEC, will use its reasonable
best efforts to have cleared by the SEC and will thereafter mail to its
shareholders as promptly as practicable Comair's proxy statement and all other
proxy materials for such meeting, (ii) will use its reasonable best efforts to
obtain the necessary approvals by its shareholders of the Merger Agreement and
the transactions contemplated hereby (subject to fiduciary duties under
applicable law) and (iii) will otherwise comply with all legal requirements
applicable to such meeting.
Except as expressly permitted by this paragraph, neither Comair's Board
nor any committee thereof shall or shall resolve to (i) not recommend, or
withdraw its approval or recommendation of, the Offer, the Merger, the Merger
Agreement or any of the transactions contemplated by the Merger Agreement, (ii)
modify or qualify such approval or recommendation in a manner adverse to Delta
or Kentucky Sub, (iii) approve, recommend or fail to take a position that is
adverse to any proposed Acquisition Proposal (as defined below) or (iv) cause
Comair to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement relating to an Acquisition Proposal (or
publicly propose to do any of the foregoing). Notwithstanding the foregoing, in
the event that, prior to the acceptance of Shares Comair's Board determines in
good faith, after it has received a Superior Proposal and after receipt of
advice from outside counsel that it must take such action to comply with its
fiduciary duties to Comair's shareholders under applicable law, then Comair's
Board may (subject to this and the following sentences) inform Comair's
shareholders that it no longer believes that the transactions contemplated by
the Merger Agreement are advisable and no longer recommends approval of the
Merger Agreement and the transactions contemplated by the Merger Agreement (a
"Subsequent Determination"), but only (i) at a time that is after the fifth
business day following Delta's receipt of written notice advising Delta that
Comair's Board has received a Superior Proposal specifying the material terms
and conditions of such Superior Proposal (and including a copy thereof with all
accompanying documentation, if in writing), identifying the person making such
Superior Proposal and stating that it intends to make a Subsequent
Determination; (ii) if Delta does not, within such five business days following
receipt of such notice, offer to make adjustments in the terms and conditions
of the Merger Agreement that Comair's Board by majority vote determines in its
good faith judgment (based upon the written advice of a financial advisor of
nationally recognized reputation) to be as favorable to Comair's shareholders
as such Superior Proposal; and (iii) if Comair has complied with the terms set
forth under "--Other Offers." Comair shall not be permitted to make a
Subsequent Determination or enter into any agreement with respect to a Superior
Proposal unless and until the Merger Agreement is terminated as described under
"--Termination" below and the fee payable as set forth under "--Certain Fees
and Expenses" is paid to Delta.
Other Offers. From and after October 17, 1999, Comair shall not, nor shall
it permit any of its subsidiaries to, nor shall it authorize or permit any of
its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another Person:
(i) solicit, initiate or encourage (including by way of furnishing
information), or knowingly take any other action designed to facilitate,
any Acquisition Proposal; or
(ii) participate in any negotiation or discussion regarding any
Acquisition Proposal;
provided, however, that if at any time prior to the Effective Time Comair's
Board determines in good faith, after receipt of advice from outside counsel,
that it must provide such information or participate in such negotiations or
discussions to comply with its fiduciary duties to Comair shareholders under
applicable law,
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Comair's Board may, in response to a proposal that it has determined based on
the terms of such proposal, including the proposed consideration per Share,
could reasonably be expected to result in a Superior Proposal and that was not
solicited by it and that did not otherwise result from a breach of the
covenants described under "--Other Offers", and subject to Comair giving Delta
at least two business days written notice of its intention to do so, (x)
furnish information with respect to Comair to any Person pursuant to a
customary confidentiality agreement containing terms no less restrictive than
the terms of the Confidentiality Agreement, provided that a copy of all such
information is delivered simultaneously to Delta, and (y) engage in
negotiations regarding such proposal.
Comair shall promptly notify Delta orally and in writing of any request
for information or of any proposal in connection with an Acquisition Proposal,
the material terms and conditions of such request or proposal (including a copy
thereof, if in writing, and all other documentation and any related
correspondence) and the identity of the Person making such request or proposal.
Comair will keep Delta reasonably informed of the status and details (including
amendments or proposed amendments) of such request or proposal on a current
basis. Comair will immediately cease and terminate any existing solicitation,
initiation, encouragement activity, discussion or negotiation with any Persons
conducted heretofore by it or its representatives with respect to the
foregoing.
Comair agrees not to release any Person (other than Delta and its
affiliates) from, or waive any provision of, or fail to enforce, any standstill
agreement or similar agreement to which it is a party and which is related to,
or which could affect, an Acquisition Proposal and agrees that Delta shall be
entitled to enforce Comair's rights and remedies under and in connection with
such agreements (other than any standstill agreement or similar agreement that
is included in any confidentiality agreement referred to in clause (x) of the
proviso above set forth under "--Other Offers.")
"Person" means an individual, a corporation, a limited liability company,
a partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or any agency or
instrumentality thereof.
"Acquisition Proposal" means a proposal or intended proposal regarding
any of (i) a transaction or series of transactions pursuant to which any Person
(or group of Persons) other than Delta and its subsidiaries acquires or would
acquire, directly or indirectly, beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of more than twenty percent (20%) of the outstanding
Shares of Comair, whether from Comair or pursuant to a tender offer or exchange
offer or otherwise, (ii) any acquisition or proposed acquisition of, or
business combination with, Comair or any of its subsidiaries, by a merger or
other business combination involving a third party (whether or not Comair or
any of its subsidiaries is the entity surviving any such merger or business
combination) or (iii) any other transaction pursuant to which any third party
acquires or would acquire, directly or indirectly, control of assets (including
for this purpose the outstanding equity securities of any subsidiary of Comair)
of Comair or any of its subsidiaries for consideration equal to twenty percent
(20%) or more of the fair market value of all of the outstanding Shares on
October 17, 1999.
"Superior Proposal" means any bona fide proposal (or its most recently
amended or modified terms, if amended or modified) made by a third party to
enter into an Acquisition Proposal for a merger or the acquisition of at least
a majority of the outstanding Shares which Comair's Board determines in its
good faith judgment (based on, among other things, the advice of a financial
advisor of nationally recognized reputation) to be more favorable to Comair's
shareholders than the transactions contemplated by the Merger Agreement, taking
into account all relevant factors (including whether, in the good faith
judgment of Comair's Board, after obtaining the advice of a financial advisor
of nationally recognized reputation, the third party is reasonably able to
finance the transaction and whether such Acquisition Proposal is reasonably
likely to be completed) and any proposed changes to the Merger Agreement that
may be proposed by Delta in response to such Acquisition Proposal.
Indemnification of Comair Directors and Officers. For six years after the
Effective Time (and to the extent Delta has been notified in writing that a
third party has made a claim that is the subject of indemnification hereunder
before the expiration of such period, for so long thereafter as such claim is
not finally adjudicated, settled, time-barred or otherwise subject to an
applicable statute of limitations), Delta will cause the Surviving Company to
indemnify and hold harmless the present and former officers and directors of
Comair in respect of acts or omissions occurring prior to
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the Effective Time to the extent provided under the Articles of Incorporation
and Bylaws of Comair in effect on October 17, 1999 and previously provided to
Delta; provided that such indemnification and such obligation shall be subject
to any limitation imposed from time to time under applicable law. For six years
after the Effective Time, Delta will cause the Surviving Company to use its
best efforts to provide officers' and directors' liability insurance in respect
of acts or omissions occurring prior to the Effective Time covering each such
Person currently covered by Comair's officers' and directors' liability
insurance policies on terms with respect to coverage and amount no less
favorable than the aggregate coverage and amounts of such policies in effect on
October 17, 1999; provided that in satisfying its obligation under this
paragraph, Delta shall not be obligated to cause the Surviving Company to pay
premiums in excess of 150% of the amount per annum Comair paid in the fiscal
year ended March 31, 1999, which amount has been disclosed to Delta in writing.
Delta guarantees irrevocably and unconditionally the obligations of the
Surviving Company under this paragraph.
Employee Benefits. During the period commencing on the Effective Time and
ending on the second anniversary thereof, Delta shall provide or cause to be
provided to employees of Comair and its subsidiaries salary and benefits no
less favorable, in the aggregate, to the salary and benefits provided such
employees immediately prior to the Effective Time (disregarding for this
purpose any stock options or other equity-based compensation provided such
employees prior to the Effective Time).
Reasonable Best Efforts. Subject to the terms and conditions of the Merger
Agreement, each party to the Merger Agreement will use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by the Merger
Agreement; provided that nothing in the Merger Agreement shall oblige Delta or
Comair or any of their respective affiliates to agree to dispose of, agree to
cease operating or agree to hold separate any business, properties or assets
which are material to the business or operations of Comair or of Delta and
their respective subsidiaries, as such businesses or operations are currently
conducted.
Public Announcements. Delta and Comair will consult with each other before
issuing any press release or making any public statement with respect to the
Merger Agreement and the transactions contemplated by the Merger Agreement.
Conditions of the Offer
See "The Tender Offer--Certain Conditions of the Offer."
Conditions to the Merger
The Merger Agreement provides that the obligations of Comair, Delta and
Kentucky Sub to consummate the Merger are subject to the satisfaction of the
following conditions: (a) if required by Kentucky Law, the Merger Agreement
shall have been approved and adopted by the shareholders of Comair in
accordance with such law; (b) any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated; (c) no provision
of any applicable law or regulation and no judgment, injunction, order or
decree shall prohibit the consummation of the Merger; and (d) Kentucky Sub
shall have purchased Shares pursuant to the Offer in sufficient number to
satisfy the Minimum Condition.
Termination
The Merger Agreement provides that the Merger Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of the Merger Agreement by the shareholders of
Comair) under the following circumstances:
(i) by mutual written consent of Comair and Delta;
(ii) by either Comair or Delta, if (A) the Offer has not been
consummated on or before April 30, 2000; provided that the right to
terminate the Merger Agreement under this subparagraph shall not
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be available to any party whose breach of any provision of the Merger
Agreement results in the failure of such purchase to be consummated on or
before such time or (B) if there shall be any law or regulation that makes
consummation of the Offer or the Merger illegal or otherwise prohibited or
if any judgment, injunction, order or decree enjoining Delta, Kentucky Sub
or Comair from consummating the Offer or the Merger is entered and such
judgment, injunction, order or decree shall become final and unappealable;
(iii) by Delta, if (A) Comair shall have entered into, or shall have
publicly announced its intention to enter into, any letter of intent,
agreement in principle, acquisition agreement or any other agreement
relating to an Acquisition Proposal; (B) the Comair Board or any committee
thereof shall or shall resolve to (x) not recommend, or withdraw its
approval or recommendation of, the Offer, the Merger, the Merger Agreement
or any of the transactions contemplated thereby, (y) modify or qualify
such approval or recommendation in a manner adverse to Delta or Kentucky
Sub or (z) approve, recommend or fail to take a position that is adverse
to any proposed Acquisition Proposal (or publicly propose to do the
foregoing); (C) due to an occurrence or circumstance that would result in
a failure to satisfy any condition set forth in "The Tender Offer--Certain
Conditions of the Offer", Delta shall have (1) failed to commence the
Offer on or before October 22, 1999 or (2) terminated the Offer without
having accepted any Shares for payment thereunder; provided that the right
to terminate the Merger Agreement under either clause (1) or clause (2)
above shall not be available to Delta if Delta's breach of any provision
of the Merger Agreement results in the failure of the Offer to be
commenced or consummated;
(iv) by Comair, in the event that prior to the Effective Time (A)
Comair's Board determines in good faith, in response to an unsolicited
Superior Proposal and after receipt of advice from outside counsel, that
it must terminate the Merger Agreement in order to comply with its
fiduciary duties to Comair's shareholders under applicable law and (B)
Comair has complied with the requirements set forth in "--Shareholder
Meeting" and in "--Other Offers" with respect to such Superior Proposal;
provided that termination pursuant to this clause shall not be effective
until payment of the fee set forth in "--Certain Fees and Expenses"; or
(v) by Comair, if (A) Delta shall have failed to commence the Offer
on or before October 22, 1999 or (B) Delta shall have terminated the Offer
without having accepted any Shares for payment thereunder; provided that
the right to terminate the Merger Agreement under either clause (A) or
clause (B) above shall not be available to Comair if (1) Comair's breach
of any provision of the Merger Agreement results in the failure of the
Offer to be commenced or consummated or (2) such failure to so commence
the Offer or to accept Shares for payment shall have resulted from the
failure of any of the conditions specified in paragraphs (e), (h) and (i)
under "The Tender Offer--Certain Conditions of the Offer" to be satisfied.
The Merger Agreement provides that if the Merger Agreement is terminated
pursuant to this section, it will become void and of no effect with no
liability on the part of any party thereto, except that termination of the
Merger Agreement shall be without prejudice to any rights Comair, Delta or
Kentucky Sub may have under the Merger Agreement against any other party to the
Merger Agreement for wilful breach of the Merger Agreement. The agreements
contained in this paragraph and under "--Certain Fees and Expenses" and
relating to governing law and waiver of jury trial shall survive the
termination of the Merger Agreement.
Amendments and Waivers
Any provision of the Merger Agreement may be amended or waived prior to
the Effective Time if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Comair, Delta and Kentucky Sub or in
the case of a waiver, by the party against whom the waiver is to be effective;
provided that after the adoption of the Merger Agreement and approval of the
Merger by the shareholders of Comair, no such amendment or waiver shall,
without the further approval of such shareholders, alter or change the amount
or kind of consideration to be received in exchange for any Shares; provided
further that after the acceptance for payment pursuant to the Offer of any
Shares,
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no such amendment or waiver shall, without the further approval of a
majority of the Independent Directors (if any Independent Directors are on
Comair's Board at such time), alter or change the amount or kind of
consideration to be received in exchange for any Shares, any term of the
Articles of Incorporation of the Surviving Company or any of the terms or
conditions of this agreement if such alteration or change would adversely
affect the holders of any Shares.
Certain Fees and Expenses
Except as provided below, all costs and expenses incurred in connection
with the Merger Agreement will be paid by the party incurring such cost or
expense. Pursuant to the Merger Agreement, Comair will pay Delta in immediately
available funds a termination fee of $50,000,000 (the "Termination Fee") if:
(i) the Merger Agreement is terminated by Delta pursuant to clauses
(A) or (B) of paragraph (iii) under "--Termination" above;
(ii) the Merger Agreement is terminated by Comair pursuant to
paragraph (iv) under "--Termination" above; or
(iii) any Person (A) shall have become the beneficial owner of more
than 20% of the then outstanding Shares (an "Acquiring Person") or (B)
shall have commenced, proposed or communicated to Comair a proposal that
is publicly disclosed for a tender or exchange offer for 20% or more (or
which, assuming the maximum amount of securities which could be purchased,
would result in any Person beneficially owning 20% or more) of the then
outstanding Shares or otherwise for the direct or indirect acquisition of
Comair or all or substantially all of its assets for a per Share
consideration having a value greater than the per Share amount of
consideration to be paid in the Offer (a "Competing Proposal") and, in the
case of either (A) or (B) above, (w) the Offer shall have commenced and
remained open for at least 20 business days, (x) the Minimum Condition
shall not have been satisfied, (y) the Merger Agreement shall have been
terminated pursuant to the terms set forth under "--Termination" (other
than pursuant to paragraphs (i), (ii)(B), (iii)(A), (iii)(B) or (iv)
thereunder) and (z) either (1) such Competing Proposal shall be
consummated or a transaction of the type referred to in clause (B) above
shall be consummated with an Acquiring Person, in either case within 12
months following the date of termination of the Merger Agreement or (2)
Comair shall enter into an agreement for such Competing Proposal or
transaction within such 12 month period and such Competing Proposal or
transaction shall be subsequently consummated.
With respect to the circumstances described in paragraphs (i) and (ii) of
this section, such fees shall be paid promptly upon the date of termination of
the Merger Agreement, if not otherwise required to be paid at an earlier time
by any other provision of the Merger Agreement, and the fee payable pursuant to
paragraph (iii) hereof shall be paid promptly upon the date of consummation of
the relevant transaction unless such fee has previously been paid pursuant to
paragraph (i) or (ii) of this section.
If Comair fails to promptly pay any amount due described in this section
and, in order to obtain such payment, Delta commences a suit which results in a
judgment against Comair for the fees set forth in this section, Comair will
also pay to Delta its reasonable costs and expenses incurred in connection with
such litigation, together with interest on the amount of the fee at the prime
rate of Citibank N.A. in effect on the date such payment was required to be
made.
The Confidentiality Agreement
Delta and Comair are parties to a Confidentiality Agreement dated
September 29, 1999 containing customary terms, including a standstill provision
and restrictions on solicitations by Delta of certain employees of Comair. A
copy of the Confidentiality Agreement is filed as Exhibit (c)(3) to the
Schedule 14D-1 and incorporated herein by reference. The foregoing summary of
the Confidentiality Agreement is qualified in its entirety by reference
thereto.
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Interests of Certain Persons in the Offer and the Merger
Chairman/Chief Executive Officer and President/Chief Operating Officer -
Employment Agreements
Effective August 10, 1999, Comair amended its employment agreements with
David R. Mueller, Chairman and Chief Executive Officer of Comair, and David A.
Siebenburgen, President and Chief Operating Officer of Comair. The term of each
of the agreements is three years. Upon the expiration of the initial three-year
term, the term of each of the agreements shall be extended for an additional
year unless either party gives thirty days' notice to not extend the term. Mr.
Mueller is employed as the Chief Executive Officer and Chairman of the Board of
Directors of Comair and has a base salary of $555,000. Mr. Siebenburgen is
employed as President and Chief Operating Officer of Comair and has a base
salary of $500,000.
Upon a "Change in Control" of Comair, the employment agreements will
terminate and (A) Mr. Mueller will be entitled to a lump-sum payment equal to
three times the sum of (i) his base salary in effect at the termination date,
(ii) the average annual bonus compensation payable to Mr. Mueller during the
prior three fiscal years plus (iii) his average annual award under Comair's
Deferred Compensation Incentive Plan during the prior three fiscal years, and
(B) Mr. Siebenburgen will be entitled to a lump-sum payment equal to three
times the sum of (i) his base salary in effect at the termination date, (ii)
his annual bonus compensation paid in fiscal 1999 plus (iii) his award under
the Deferred Compensation Plan with respect to fiscal 1999. The acceptance of
Shares for payment in the Offer will constitute a Change in Control for
purposes of employment agreements.
In addition, upon a Change in Control the executives' stock options and
interest in Comair's Deferred Incentive Compensation Plan will fully vest. The
employment agreements also provide that Comair will provide to the executives
(i) a fully paid-up term life insurance policy and disability policy with
premiums pre-paid for the remainder of the executives' lives, (ii) family
medical insurance coverage and benefits comparable to the insurance coverage
provided to Comair's executives for the executives and their spouses for the
remainder of their lives (each executive may elect to receive a lump sum in
cash equal to the present value of this medical insurance coverage), (iii)
lifetime travel privileges for the executives, their spouses and dependent
children on all Comair flights and (iv) lifetime access to and the right to
travel, upon reasonable notice, on a private aircraft furnished by and at the
expense of Comair, provided that if such travel exceeds fifty flight hours in a
twelve-month period, such executive shall reimburse Comair for such excess
travel. To the extent that any of the foregoing payments and benefits are
subject to the golden parachute excise tax under Section 4999 of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), the executives will be
entitled to payments to make them whole for such taxes.
The foregoing description of Mr. Mueller's and Mr. Siebenburgen's
employment agreements does not purport to be complete and is qualified in its
entirety by reference to such agreements which are filed as Exhibits (c)(2) and
(c)(3) of the 14D-9 and are incorporated herein by reference.
Senior Vice Presidents - Employment Agreements
Effective August 10, 1999, Comair entered into an employment agreement
with each of K. Michael Stuart, Charles E. Curran, Randy D. Rademacher and
Linda E. Noble. The term of each of such agreement is two years. In their
capacity as Senior Vice Presidents, Messrs. Stuart, Curran and Rademacher are
paid a base salary of $220,000. In her capacity as a Senior Vice President, Ms.
Noble is paid a base salary of $190,000.
Upon a "Change in Control" of Comair, Messrs. Stuart, Curran and
Rademacher and Ms. Noble will be entitled to a lump-sum amount that is equal to
two times the sum of (i) the base salaries in effect at the termination date,
(ii) the average annual bonus compensation payable to each executive during the
prior three fiscal years and (iii) the average annual award under Comair's
Deferred Compensation Incentive Plan during the prior three fiscal years. Each
of Messrs. Stuart's, Curran's and Rademacher's and Ms. Noble's employment
agreements also provide for (i) a fully paid-up term life insurance policy and
disability policy with premiums prepaid for two years, (ii) family medical
insurance coverage and benefits comparable to the insurance coverage provided
to Comair's executives for the executive and his or her spouse for two years
(however, the executive may elect to receive a lump sum, in cash, equal of the
present value of the medical insurance coverage for such period) and (iii)
travel privileges for two years for each of them and each of their respective
spouses and dependent children on all Comair flights. To the extent that any of
the foregoing payments and benefits are subject to the golden parachute excise
tax under Code Section 4999,
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the executives will be entitled to payments to make them whole for such taxes.
The acceptance of Shares for Payment in the Offer will constitute a Change in
Control for purposes of the employment agreements.
The foregoing description of the Employment Agreements of Messrs. Stuart,
Curran and Rademacher and Ms. Noble does not purport to be complete and is
qualified in its entirety by reference to such employment agreements which are
filed as Exhibits (c)(5), (c)(4), (c)(6) and (c)(7) of the 14D-9 and are
incorporated herein by reference.
Vice Presidents - Employment Agreements
Effective August 10, 1999, Comair entered into an employment agreement
with each of Donald T. Bornhorst, C. Michael Willis, Donald J. Osmundson, Brian
L. McDonald, Linda D. Landers, Kenneth W. Marshall and Ralph E. Martin
(collectively, the "Vice Presidents") entered into employment agreements with
Comair. The term of each such agreement is one year.
Upon a "Change in Control" of Comair, the Vice Presidents will be entitled
to a lump-sum amount that is equal to one times the sum of (i) the base
salaries in effect at the termination date, (ii) the average annual bonus
compensation payable to each executive during the prior three fiscal years and
(iii) the average annual award under Comair's Deferred Compensation Incentive
Plan during the prior three fiscal years. Each of the Vice Presidents'
employment agreements also provides for (i) a fully paid-up term life insurance
policy and disability policy with premiums prepaid for one year, (ii) family
medical insurance coverage and benefits comparable to the insurance coverage
provided to Comair's executives for the executive and his or her spouse for one
year (however, the executive may elect to receive a lump sum, in cash, equal of
the present value of the medical insurance coverage for such period) and (iii)
travel privileges for one year for each of them and each of their respective
spouses and dependent children on all Comair flights. To the extent that any
payments and benefits are subject to the golden parachute excise tax under Code
Section 4999, they will be entitled to payments to make them whole for such
taxes. The acceptance of Shares for payment in the Offer will constitute a
Change in Control for purposes of the employment agreements.
The foregoing description of the employment agreements of the Vice
Presidents does not purport to be complete and is qualified in its entirety by
reference to such employment agreements.
Non-Employee Directors
In August Comair and each of Peter H. Forster, John A. Haas, Gerald L.
Walker, Robert H. Castellini, Christopher J. Murphy, III and Raymond A. Mueller
(the "Non-Employee Directors") executed certain agreements in connection with
the additional services and responsibilities required by any change in control
situation. Upon a "Change in Control" of Comair, each Non-Employee Director is
entitled to receive a lump-sum payment equal to such director's earned but
unpaid director's fees for the period through and including the date of the
Change in Control and an amount equal to five times the annual director's fees.
The Non-Employee Directors agreements also provide for lifetime travel
privileges for the Non-Employee Directors and their immediate family members on
all Comair flights. The basic annual director fee paid to Non-Employee
Directors of Comair is $20,000. The acceptance of Shares for payment in the
Offer will constitute a Change in Control for purposes of these agreements.
The foregoing description of the Non-Employee Directors agreement does not
purport to be complete and is qualified in its entirety by reference to the
Non-Employee Directors agreements which are filed as Exhibits (c)(8) through
(c)(13) to the 14D-9, and are incorporated herein by reference.
Effective August 10, 1999, the Board of Directors concluded that Comair
and its shareholders would benefit from assistance in exploring certain
strategic alternatives for Comair, including acquisitions, code sharing,
multiple connection agreements and other alternatives, including conducting
discussions with Delta with respect to the renewal of the Delta Connection
Agreement. Mr. Forster has been paid $403,000 by Comair for services rendered
to Comair in evaluating and negotiating these strategic alternatives.
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Raymond A. Mueller - Consulting Agreement
The consulting agreement between Raymond A. Mueller ("Mr. R. Mueller") and
Comair became effective upon the retirement of Mr. R. Mueller in June 1990 and
will terminate upon his death. The consulting agreement, as amended on June 5,
1990, provides for annual payments of $150,000 to Mr. R. Mueller. Upon a
"Change of Control" of Comair, Mr. R. Mueller may, at his sole option, elect to
terminate the Consulting Agreement, in which event Comair is required to make a
lump sum payment equal to the present value of the amounts to be paid over the
remaining term of the Consulting Agreement. On August 10, 1999, the Board of
Directors authorized an amendment to Mr. Mueller's Consulting Agreement to
provide lifetime access to and the right to travel, upon reasonable notice, on
a private aircraft furnished by and at the expense of Comair, provided that if
such travel exceeds fifty flight hours in a twelve-month period, Mr. R. Mueller
shall reimburse Comair for such excess travel. During the term of the
Consulting Agreement, Mr. R. Mueller is entitled to receive the
hospitalization, health and accident and disability insurance made available to
Comair's executive officers. The acceptance of Shares for payment in the Offer
will constitute a Change in Control for purposes of the Consulting Agreement.
The foregoing description of the Consulting Agreement with Mr. R. Mueller
does not purport to be complete and is qualified in its entirety by reference
to such agreement which is filed as Exhibit (c)(4) to the 14D-9 and is
incorporated herein by reference.
Stock Option Plans
Upon a "Change in Control"of Comair, each option outstanding under
Comair's employee and director stock option plans will be fully vested and
exercisable and, at the Effective Time of the Merger, will be canceled in
return for a cash payment to the optionholder equal to the product of the
merger consideration minus the per share exercise price of the option,
multiplied by the number of shares subject to such option. The acceptance of
Shares for Payment in the Offer will constitute a Change in Control for
purposes of the outstanding stock options.
The foregoing description of the 1990 Stock Option Plan, the 1992
Directors' Stock Option Plan and the 1998 Stock Option Plan does not purport to
be complete and is qualified in its entirety by reference to such agreements
which are filed as Exhibits (c)(15), (c)(16) and (c)(17) to the 14D-9, and are
incorporated herein by reference.
Deferred Incentive Compensation Plan
Comair's Deferred Incentive Compensation Plan (the "Deferred Plan")
permits a select group of management or highly compensated employees to defer a
specified percentage of their incentive compensation. The Deferred Plan also
provides for Comair to make contributions based upon the net profit of the
Company on behalf of certain officers. Such officers' right to receive Comair's
contributions vests over twenty years. However, in the event of a "Change in
Control" of Comair, such contributions will become fully vested. The acceptance
of the Shares for payment in the Offering will constitute a Change in Control
under the Deferred Plan.
The foregoing description of the Deferred Incentive Compensation Plan does
not purport to be complete and is qualified in its entirety by reference to the
Deferred Incentive Compensation Plan which is filed as Exhibit (c)(18) to the
14D-9, and is incorporated herein by reference.
Stock Options
Comair previously granted to certain employees and directors options to
purchase Shares under the 1998, 1992 and 1990 Stock Option Plans. Under the
terms of the Merger Agreement, the stock options outstanding as of the
Effective Time will be cancelled in return for a cash payment to the option
holder equal to the product of (A) the Merger Consideration minus the per Share
exercise price of the option, multiplied by (B) the number of Shares subject to
the option.
The table below sets forth for each of Messrs. Mueller, Siebenburgen,
Curran, Stuart and Rademacher, for all other executive officers as a group and
for all non-employee directors as a group: (i) the number of stock options held
as of
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March 31, 1999 and (ii) the aggregate value of such options based on the
spread between the exercise price of such options and the Merger Consideration:
Aggregate
Value of Options Based
Stock Options on Merger Consideration
------------- -----------------------
David R. Mueller....................... 926,532 $ 12,542,337
David A. Siebenburgen.................. 517,424 $ 6,506,483
Charles E. Curran...................... 199,539 $ 2,429,154
K. Michael Stuart...................... 199,339 $ 2,424,084
Randy D. Rademacher.................... 310,122 $ 4,608,211
Other executive officers as a group.... 188,503 $ 2,465,200
Non-employee directors as a group...... 455,680 $ 7,258,982
Beneficial Ownership of the Shares
Schedules I and II of this Offer to Purchase set forth information
concerning beneficial ownership of the Shares as of March 31, 1999 by each of
the directors and executive officers of Comair, Delta, Kentucky Sub and Delta
Holdings, respectively.
Comair has been advised that all of its directors and executive officers
intend to tender or cause the tender of all of their Shares pursuant to the
Offer.
Related Party Transactions
See "Special Factors-- Background of the Offer-- Marketing and Code
Sharing Arrangements Between Comair and Delta" and "-- Delta Ownership of
Comair Shares; Stock Agreement."
Management of Comair After the Merger
See "Special Factors-- Plans for Comair after the Offer and the Merger."
THE TENDER OFFER
Terms of the Offer
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Kentucky Sub will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn as
permitted by "The Tender Offer--Withdrawal Rights." The term "Expiration Date"
means 12:00 Midnight, New York City time, on Friday, November 19, 1999, unless
and until Kentucky Sub, in its sole discretion (but subject to the terms and
conditions of the Merger Agreement), shall have extended the period during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Kentucky Sub,
shall expire.
Kentucky Sub expressly reserves the right, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), at any time and
from time to time, to extend for any reason the period of time during which the
Offer is open, including the occurrence of any of the conditions specified in
"The Tender Offer--Certain Conditions of the Offer," by giving oral or written
notice of such extension to the Depositary. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the rights of a tendering shareholder to withdraw such shareholder's
Shares. See "The Tender Offer--Withdrawal Rights."
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<PAGE>
Subject to the applicable regulations of the Commission, Kentucky Sub also
expressly reserves the right, in its sole discretion (but subject to the terms
and conditions of the Merger Agreement), at any time and from time to time, (i)
to delay acceptance for payment of, or, regardless of whether such Shares were
theretofore accepted for payment, payment for, any Shares, pending receipt of
any regulatory approval specified in "The Tender Offer--Certain Legal Matters;
Regulatory Approvals," (ii) to terminate the Offer and not accept for payment
any Shares if, on or prior to the Expiration Date, any of the conditions
specified in "The Tender Offer--Certain Conditions of the Offer" exists and
(iii) to waive any condition, or otherwise amend the Offer in any respect, by
giving oral or written notice of such delay, termination, waiver or amendment
to the Depositary and by making a public announcement thereof. Kentucky Sub
acknowledges that (i) Rule 14e-1(c) under the Exchange Act requires Kentucky
Sub to pay the consideration offered or return the Shares tendered promptly
after the termination or withdrawal of the Offer and (ii) Kentucky Sub may not
delay acceptance for payment of, or payment for (except as provided in clause
(i) of the first sentence of this paragraph), any Shares upon the occurrence of
any of the conditions specified in "The Tender Offer--Certain Conditions of the
Offer" without extending the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act, which require that material changes be
promptly disseminated to shareholders in a manner reasonably designed to inform
them of such changes) and without limiting the manner in which Kentucky Sub may
choose to make any public announcement, Kentucky Sub shall have no obligation
to publish, advertise or otherwise communicate any such public announcement
other than by issuing a press release to the Dow Jones News Service.
If Kentucky Sub makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Kentucky Sub will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Kentucky Sub should decide to decrease the number of Shares being sought
or to increase or decrease the consideration being offered in the Offer, such
decrease in the number of Shares being sought or such increase or decrease in
the consideration being offered will be applicable to all shareholders whose
Shares are accepted for payment pursuant to the Offer and, if at the time
notice of any such decrease in the number of Shares being sought or such
increase or decrease in the consideration being offered is first published,
sent or given to holders of such Shares, the Offer is scheduled to expire at
any time earlier than the period ending on the tenth business day from and
including the date that such notice is first so published, sent or given, the
Offer will be extended at least until the expiration of such ten business day
period. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or United States federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition and the other conditions specified in "The Tender Offer--Certain
Conditions of the Offer."
Comair has provided Kentucky Sub with Comair's shareholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares whose names appear on Comair's
shareholder list and will be furnished, for subsequent transmittal to
beneficial owners of Shares, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
Acceptance for Payment and Payment for Shares
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Kentucky Sub will accept for payment, and will pay
for, all Shares validly tendered prior to the Expiration Date and not properly
withdrawn, promptly after the later to occur of
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(i) the Expiration Date and (ii) the satisfaction or waiver of the conditions
to the Offer set forth in "The Tender Offer-Certain Conditions of the Offer."
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (A) the certificates evidencing such Shares (the "Share Certificates") or
timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Tender Offer--Procedures for Accepting the Offer and Tendering Shares," (B) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message (as defined below) in lieu of the
Letter of Transmittal and (C) any other documents required under the Letter of
Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares which are the subject of such book-entry
confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Kentucky Sub may enforce such
agreement against such participant.
For purposes of the Offer, Kentucky Sub will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Kentucky Sub gives oral or written notice to the
Depositary of Kentucky Sub's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit
of the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from Kentucky Sub
and transmitting such payments to tendering shareholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE
PRICE FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer, or if Share Certificates are
submitted evidencing more Shares than are tendered, Share Certificates
evidencing unpurchased Shares will be returned, without expense to the
tendering shareholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in "The Tender Offer--Procedures for
Accepting the Offer and Tendering Shares," such Shares will be credited to an
account maintained at the Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
If, prior to the Expiration Date, Kentucky Sub shall increase the
consideration offered to any holders of Shares pursuant to the Offer, such
increased consideration shall be paid to all holders of Shares that are
purchased pursuant to the Offer, whether or not such Shares were tendered prior
to such increase in consideration.
Kentucky Sub reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Kentucky Sub of its obligations under
the Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
Procedures for Accepting the Offer and Tendering Shares
In order for a holder of Shares to validly tender Shares pursuant to the
Offer, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal) and any other documents required by the Letter of Transmittal,
must be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase and either (i) the Share Certificates
evidencing tendered Shares must be received by the Depositary at such address
or such Shares must be tendered pursuant to the procedure for book-entry
transfer described below and a Book-Entry Confirmation must be received by the
Depositary (including an Agent's Message if the tendering shareholder has not
delivered a Letter of Transmittal), in each case prior to the Expiration Date,
or (ii) the
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tendering shareholder must comply with the guaranteed delivery procedure
described below. If certificates for Shares are forwarded to the Depositary in
multiple deliveries, a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
must accompany each delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer
The Depositary will establish accounts with respect to the Shares at the
Book-Entry Transfer Facility for purposes of the Offer within two business days
after the date of this Offer to Purchase. Any financial institution that is a
participant in the system of the Book-Entry Transfer Facility may make a
book-entry delivery of Shares by causing the Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account at the Book-Entry Transfer
Facility in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer at the Book-Entry Transfer Facility, either the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in lieu
of the Letter of Transmittal, and any other required documents, must, in any
case, be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering shareholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees
Signatures on all Letters of Transmittal must be guaranteed by a firm
which is a member of a recognized Medallion Signature Guarantee Program
approved by The Securities Transfer Associations, Inc., except in cases where
Shares are tendered (i) by a registered holder of Shares who has not completed
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If a Share Certificate is registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made, or a Share Certificate not accepted for payment or not
tendered is to be returned, to a person other than the registered holder(s),
then the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered
holder(s) appear on the Share Certificate, with the signature(s) on such Share
Certificate or stock powers guaranteed by an Eligible Institution. See
Instructions 1, 5 and 7 of the Letter of Transmittal.
Guaranteed Delivery
If a shareholder desires to tender Shares pursuant to the Offer and the
Share Certificates evidencing such shareholder's Shares are not immediately
available or such shareholder cannot deliver the Share Certificates and all
other required documents to the Depositary prior to the Expiration Date, or
such shareholder cannot complete the procedure for delivery by book-entry
transfer on a timely basis, such Shares may nevertheless be tendered; provided
that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Kentucky Sub, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation)
evidencing all tendered Shares, in proper form for transfer, in each case
together with the Letter of Transmittal (or a facsimile thereof), properly
completed and
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duly executed, with any required signature guarantees (or, in the case of
a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the Nasdaq
National Market System operated by the National Association of Securities
Dealers, Inc. is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Kentucky Sub.
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of the Share Certificates evidencing such Shares, or a Book-Entry Confirmation
of the delivery of such Shares, and the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message), and
any other documents required by the Letter of Transmittal.
Determination of Validity
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares will be determined
by Kentucky Sub in its sole discretion, which determination shall be final and
binding on all parties. Kentucky Sub reserves the absolute right to reject any
and all tenders determined by it not to be in proper form or the acceptance for
payment of which may, in the opinion of its counsel, be unlawful. Subject to
the terms of the Merger Agreement, Kentucky Sub also reserves the absolute
right to waive any condition of the Offer or any defect or irregularity in the
tender of any Shares of any particular shareholder, whether or not similar
defects or irregularities are waived in the case of other shareholders. No
tender of Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Kentucky Sub, Delta, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Kentucky Sub's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding on all parties.
Other Requirements
By executing the Letter of Transmittal as set forth above, a tendering
shareholder irrevocably appoints designees of Kentucky Sub as such
shareholder's proxies, each with full power of substitution, in the manner set
forth in the Letter of Transmittal, to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted for
payment by Kentucky Sub (and with respect to any and all other Shares or other
securities issued or issuable in respect of such Shares on or after October 17,
1999). All such proxies shall be considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the
extent that, Kentucky Sub accepts such Shares for payment. Upon such acceptance
for payment, all prior proxies given by such shareholder with respect to such
Shares (and such other Shares and securities) will be revoked without further
action, and no subsequent proxies may be given nor any subsequent written
consent executed by such shareholder (and, if given or executed, will not be
deemed to be effective) with respect thereto. The designees of Kentucky Sub
will, with respect to the Shares (and such other Shares and securities) for
which the appointment is effective, be empowered to exercise all voting and
other rights of such shareholder as they in their sole discretion may deem
proper at any annual or special meeting of Comair's shareholders or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. Kentucky Sub reserves the right to require that, in order
for Shares to be deemed validly tendered, immediately upon Kentucky Sub's
payment for such Shares, Kentucky Sub must be able to exercise full voting
rights with respect to such Shares (and such other Shares and securities).
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the Offer, as well as
the tendering shareholder's representation and warranty that (i) such
shareholder owns the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Exchange Act, (ii) the tender of such Shares complies
with Rule 14e-4 and (iii) such shareholder has the full power and authority to
33
<PAGE>
tender and assign the Shares tendered, as specified in the Letter of
Transmittal. Kentucky Sub's acceptance for payment of Shares tendered pursuant
to the Offer will constitute a binding agreement between the tendering
shareholder and Kentucky Sub upon the terms and subject to the conditions of
the Offer.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT
TO CERTAIN SHAREHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO
THE OFFER, EACH SUCH SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH
SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER OR SOCIAL SECURITY NUMBER,
OR CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING, BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF
TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A SHAREHOLDER, THE
DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH
SHAREHOLDER. SEE INSTRUCTION 8 OF THE LETTER OF TRANSMITTAL. IF A SHAREHOLDER
IS A NON-RESIDENT ALIEN OR FOREIGN ENTITY NOT SUBJECT TO BACK-UP WITHHOLDING,
THE SHAREHOLDER MUST GIVE THE DEPOSITARY A COMPLETED FORM W-8 CERTIFICATE OF
FOREIGN STATUS PRIOR TO RECEIPT OF PAYMENT.
Withdrawal Rights
Tenders of the Shares made pursuant to the Offer are irrevocable except
that such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Kentucky Sub pursuant to the Offer,
may also be withdrawn at any time after December 20, 1999. If Kentucky Sub
extends the Offer, is delayed in its acceptance for payment of Shares or is
unable to accept Shares for payment pursuant to the Offer for any reason, then,
without prejudice to Kentucky Sub's rights under the Offer, the Depositary may,
nevertheless, on behalf of Kentucky Sub, retain tendered Shares, and such
Shares may not be withdrawn except to the extent that tendering shareholders
are entitled to withdrawal rights as described herein. Any such delay will be
an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder of such Shares, if different from that of the
person who tendered such Shares. If Share Certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such Share Certificates, the serial numbers
shown on such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure
for book-entry transfer as set forth in "The Tender Offer--Procedures for
Accepting the Offer and Tendering Shares," any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Kentucky Sub, in its sole
discretion, whose determination will be final and binding on all parties. None
of Kentucky Sub, Delta, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in "The Tender Offer--Procedures for Accepting the Offer
and Tendering Shares."
Certain United States Federal Income Tax Consequences
The summary of federal income tax consequences set forth below is for
general information only and is based on the law as currently in effect. The
tax consequences to each shareholder will depend in part upon such
shareholder's particular situation. Special tax consequences not described
herein may be applicable to particular classes of taxpayers,
34
<PAGE>
such as financial institutions, broker-dealers, persons who are not citizens or
residents of the United States and shareholders who acquired their Shares
through the exercise of an employee stock option or otherwise as compensation.
ALL SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR
FOREIGN INCOME AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for federal income tax purposes under the Internal Revenue Code of
1986, as amended, and may also be a taxable transaction under applicable state,
local or foreign income tax laws. Generally, for federal income tax purposes, a
tendering shareholder will recognize gain or loss in an amount equal to the
difference between the cash received by the shareholder pursuant to the Offer
and the shareholder's adjusted tax basis in the Shares purchased pursuant to
the Offer. For federal income tax purposes, such gain or loss will be a capital
gain or loss if the Shares are a capital asset in the hands of the shareholder.
Shareholders are urged to consult with their own tax advisors concerning the
treatment of capital gain or loss for federal income tax purposes (including
the possibility of a reduced tax rate on certain capital gains and the
limitations on the deductibility of capital loss).
A shareholder that tenders Shares may be subject to backup withholding
unless the shareholder provides its taxpayer identification number and
certifies that such number is correct or properly certifies that it is awaiting
a TIN, or unless an exemption applies. A shareholder who does not furnish its
taxpayer identification number may be subject to a penalty imposed by the
Internal Revenue Service. See "The Tender Offer--Procedures for Accepting the
Offer and Tendering Shares."
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the Internal
Revenue Service. If backup withholding results in an overpayment of tax, a
refund can be obtained by the shareholder upon filing an appropriate income tax
return.
The receipt of cash by shareholders pursuant to the Merger should result
in federal income tax consequences to such shareholders similar to those
described above.
Price Range of Shares; Dividends
The Shares are traded in the over-the-counter market and are quoted on the
Nasdaq National Market System under the symbol COMR.
The following table sets forth for the periods indicated the high and low
sale prices per Share as reported on the Nasdaq National Market System and the
cash dividends paid per Share, as reported in Comair's Annual Report on Form
10-K for the fiscal year ended March 31, 1999, and thereafter as reported in
published financial sources.
<TABLE>
Market Price
---------------- Divided
High Low Declared
------- ----- --------
<S> <C> <C> <C>
Fiscal 1998 (April 1, 1997 - March 31, 1998)
First Quarter..................................................... $12.33 $8.81 $0.027
Second Quarter.................................................... 13.05 11.00 0.027
Third Quarter..................................................... 17.42 11.95 0.027
Fourth Quarter.................................................... 20.25 15.00 0.027
------
Year........................................................... $20.25 $8.81 $0.108
======
Fiscal 1999 (April 1, 1998 - March 31, 1999)
First Quarter..................................................... $21.50 $15.17 $0.027
Second Quarter.................................................... 23.50 16.25 0.027
Third Quarter..................................................... 22.83 13.92 0.027
Fourth Quarter.................................................... 29.00 21.67 0.027
------
Year........................................................... $29.00 $13.92 $0.108
======
Fiscal 2000 (April 1, 1999 - March 31, 2000)
First Quarter..................................................... $25.75 $17.75 $0.03
Second Quarter.................................................... 25.63 15.56 0.03
Third Quarter (through October 21, 1999).......................... $23.13 $15.63 --
</TABLE>
35
<PAGE>
On October 21, 1999 there were approximately 3,100 holders of record of
Shares and 95,526,431 outstanding Shares.
The Merger Agreement prohibits Comair from paying or declaring any
dividends on the Shares other than a regular quarterly dividend not in excess
of $0.03 per Share, declared no earlier than January 1, 2000 and only in the
event that Delta has not purchased Shares pursuant to the Offer by such time.
On October 15, 1999, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the closing price of the
Shares on the Nasdaq National Market System was $17 15/16 per Share. On October
21, 1999, the last full day of trading before the commencement of the Offer,
the closing price of the Shares on the Nasdaq National Market System was $23
5/64 per Share. Shareholders are urged to obtain a current market quotation for
the Shares.
Certain Information Concerning Comair
Except as otherwise set forth herein, the information concerning Comair
contained in this Offer to Purchase, including financial information, has been
furnished by Comair or has been taken from or based upon publicly available
documents and records on file with the Commission and other public sources.
General
Comair is a Kentucky corporation with its principal offices located at the
Cincinnati/Northern Kentucky International Airport, Cincinnati, Ohio 45275.
Comair is a holding company, the principal assets of which are the shares of
its wholly owned subsidiary Comair, Inc., an Ohio corporation. Comair considers
the air transportation of passengers and cargo in scheduled airline service to
be its predominant business segment.
The name, citizenship, business address, principal occupation or
employment and five-year employment history for each of the directors and
executive officers of Comair and certain other information are set forth in
Schedule I hereto.
Schedule I to this Offer to Purchase lists, to the best of Delta's
knowledge, the aggregate amount and percentage of the Shares beneficially owned
by the officers, directors and associates of Comair. To the best of Delta's
knowledge, none of such persons has affected any transaction in such Shares
during the past 60 days, other than the purchase of 2,500 Shares on August 17,
1999 at a price per Share of $23.00 and of 500 Shares on August 26, 1999 at a
price per share of $23.44 by trusts of which Robert H. Castellini is a partial
grantor. Mr. Castellini's wife is the trustee of such trusts, and Mr.
Castellini's son works for the brokerage house which makes the investment
decisions for trusts. Mr. Castellini has no control over the investment
decisions or the management of such trusts.
Comair is subject to the informational filing requirements of the Exchange
Act and, in accordance therewith, is required to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at the Commission's regional offices located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding
36
<PAGE>
the public reference facilities may be obtained from the Commission by
telephoning 1-800-SEC-0330. Comair's filings are also available to the public
on the Commission's Internet site (http://www.sec.gov). Copies of such
materials may also be obtained by mail from the Public Reference Section of the
Commission at Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
Selected Financial Information
Set forth below is certain selected financial information relating to
Comair which has been excerpted or derived from the audited financial
statements contained in Comair's Annual Report on Form 10-K for each of the
fiscal years ended March 31, 1999 and 1998 (collectively, the "Comair 10-K's")
and the unaudited financial statements contained in Comair's June 30, 1999
Quarterly Report on Form 10-Q (the "Comair 10-Q"). The financial information
that follows is qualified in its entirety by reference to the Comair 10-K's and
the Comair 10-Q and other documents filed by Comair with the Commission which
contain comprehensive financial information. The Comair 10-K's, the Comair 10-Q
and such other documents may be examined and copies may be obtained from the
offices of the Commission in the manner set forth above under "--General."
<TABLE>
Three Months Three Months Year Ended Year Ended
Ended June 30, Ended June 30, March 31, March 31,
1999 1998 1999 1998
-------------- -------------- --------------- ---------------
(unaudited) (audited)
<S> <C> <C> <C> <C>
Total operating revenues............................ $ 219,469,249 $ 187,912,194 $ 763,291,180 $ 651,162,221
Operating income.................................... 66,062,688 53,880,692 204,089,070 161,597,959
Income before income taxes.......................... 68,728,669 55,395,627 211,630,735 164,855,210
Net income.......................................... 43,161,669 34,334,627 132,934,735 102,213,210
Net income per share - Basic........................ 0.45 0.34 1.35 1.02
Net income per share - Diluted...................... 0.44 0.34 1.33 1.01
At end of period:
Working capital.................................. 228,567,973 226,541,818 213,356,262 188,458,038
Total assets..................................... 784,705,574 710,810,576 750,753,890 669,736,801
Long-term obligations............................ 98,270,514 109,840,829 100,563,380 114,312,516
Total shareholders' equity....................... 443,183,488 389,947,621 432,369,458 361,845,841
Additional Data:
Book value per share............................. 4.62 3.91 4.44 3.62
Ratio of earnings to fixed charges............... $5.70 $5.37 $4.92 $4.47
</TABLE>
Repurchases of Shares by Comair
Comair has made the following repurchases of Shares since April 1, 1997
(all numbers and amounts have been adjusted for stock splits):
<TABLE>
Amount of Shares Range of Prices Average
Purchased Paid Purchase Price
--------- ---- --------------
<S> <C> <C> <C>
Fiscal 1998 (April 1, 1997 - March 31, 1998)
First Quarter.................................................. 90,000 $10.889-11.000 $10.96
Second Quarter................................................. -- -- --
Third Quarter.................................................. -- -- --
Fourth Quarter................................................. 727,500 17.417-19.417 18.73
Fiscal 1999 (April 1, 1998 - March 31, 1999)
First Quarter.................................................. 195,000 17.708-19.896 18.52
Second Quarter................................................. 1,710,000 16.583-22.799 20.08
Third Quarter.................................................. 786,000 19.500-21.361 20.66
Fourth Quarter................................................. -- -- --
Fiscal 2000 (April 1, 1999 - March 31, 2000)
First Quarter.................................................. 1,405,000 18.713-22.700 20.80
Second Quarter................................................. 496,700 $23.625-24.750 $23.99
Third Quarter (through October 21, 1999).......................... -- -- --
</TABLE>
37
<PAGE>
Certain Information Concerning Delta, Delta Holdings and Kentucky Sub
Delta is a Delaware corporation with its principal offices located at
Hartsfield Atlanta International Airport, 1030 Delta Boulevard, Atlanta,
Georgia 30320. Delta is a major air carrier providing scheduled air
transportation for passengers, freight and mail.
Delta's total operating revenues for the years ended June 30, 1999 and
1998, were $14.7 billion and $14.1 billion, respectively. Its pre-tax income
for the year ended June 30, 1999 was $1.8 billion, yielding net income of $1.1
billion, while its pre-tax income for the year ended June 30, 1998 was $1.6
billion, resulting in net income of $1.0 billion.
At June 30, 1999, Delta had total assets of $16.5 billion and
shareholders' equity of $4.4 billion, compared with total assets of $14.6
billion and shareholders' equity of $4.0 billion as at June 30, 1998.
Delta Holdings is a Delaware corporation established on December 19, 1989
for the purpose of holding equity interests in certain subsidiaries of Delta,
as well as in other entities in which Delta owns an equity interest, including
its current connection carriers. Delta Holdings is a wholly-owned subsidiary of
Delta. Its principal offices are located at 1105 North Market Street, Suite
1300, Wilmington, Delaware 19801. Delta Holdings is the direct holder of
21,072,655 Shares.
Kentucky Sub is a Kentucky corporation established on October 15, 1999. It
has not carried on any activities other than the execution of the Merger
Agreement. Its principal offices are located at Hartsfield Atlanta
International Airport, Post Office Box 20706, Atlanta, Georgia 30320. Kentucky
Sub is a direct, wholly-owned subsidiary of Delta Holdings, and an indirect,
wholly-owned subsidiary of Delta.
The name, citizenship, business address, principal occupation or
employment and five-year employment history for each of the directors and
executive officers of Delta, Delta Holdings and Kentucky Sub and certain other
information are set forth in Schedule II hereto.
As of October 21, 1999, Delta beneficially owned 21,072,655 of the
95,526,431 outstanding Shares, representing approximately 22.06% of the Shares
then outstanding.
Except as described in this Offer to Purchase, none of Delta, Kentucky
Sub, or, to the best knowledge of Delta, any of the persons listed in Schedule
II to this Offer to Purchase or any associate or majority-owned subsidiary of
Delta or any such listed persons owns or has any right to acquire, directly or
indirectly, any Shares or has effected any transaction in the Shares during the
past 60 days.
Except as provided in the Merger Agreement or as otherwise described in
this Offer to Purchase, none of Delta, Kentucky Sub, Delta Holdings nor, to the
best knowledge of Delta, Kentucky Sub and Delta Holdings, any of the persons
listed in Schedule II to this Offer to Purchase, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of Comair, including, but not limited to, any contract, arrangement,
finder's fees, understanding or relationship concerning the transfer or voting
of such securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guaranties against loss, or the giving or withholding of
proxies, consents or authorizations.
Except as set forth in this Offer to Purchase, since April 1, 1996, none
of Delta, Kentucky Sub, Delta Holdings nor, to the best knowledge of Delta,
Kentucky Sub, Delta Holdings, or any of the persons listed on Schedule II
hereto, has had any business relationship or transaction with Comair or any of
its executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, since April 1, 1996, there have
been no contacts, negotiations or transactions between Delta or any of its
subsidiaries or, to the best knowledge of Delta, any of the persons listed in
Schedule II to this Offer to Purchase, on the one hand, and Comair or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
38
<PAGE>
Delta is subject to the informational filing requirements of the Exchange
Act and, in accordance therewith, is required to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at the Commission's regional offices located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding the
public reference facilities may be obtained from the Commission by telephoning
1-800-SEC-0330. Delta's filings are also available to the public on the
Commission's Internet site (http://www.sec.gov). Copies of such materials may
also be obtained by mail from the Public Reference Section of the Commission at
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Certain reports
and other information concerning Delta may also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
Financing of the Offer and the Merger
The total amount of funds required by Delta and Kentucky Sub to consummate
the Offer and the Merger and to pay related fees and expenses is estimated to
be approximately $1.8 billion. The Offer and the Merger are not conditioned on
obtaining financing. Delta expects that it will obtain such funds from
borrowings under a term loan facility that Delta currently intends to enter
into with The Chase Manhattan Bank ("Chase") as agent.
Pursuant to a commitment letter dated October 17, 1999 (the "Commitment
Letter"), Delta has obtained a commitment from Chase to provide to Delta a
senior unsecured term loan (the "Term Loan") of up to $1.9 billion, the
proceeds of which would be used to pay the funds required by Delta and Kentucky
Sub to consummate the Offer and the Merger and to pay related fees and
expenses. Chase will serve as administrative agent in respect of the Term Loan
and Chase Securities Inc. ("CSI") will serve as lead arranger and book manager.
The principal terms of the Term Loan, including the covenants and events of
default thereunder, shall be substantially similar to those applicable to
Delta's existing Credit Agreement dated as of May 2, 1997, among Delta, the
banks party thereto and NationsBank, N.A. (South) as agent bank (the "1997 Bank
Credit Agreement").
The Term Loan may be funded in two drawings: (i) on the date following the
Expiration Date, in connection with the consummation of the Offer (the "First
Drawdown Date"), and (ii) on the date following the consummation of the Merger
(the "Second Drawdown Date"). Notwithstanding the foregoing, all unfunded
commitments in respect of the Term Loan shall automatically terminate on the
120th day after the First Drawdown Date. All borrowings under the Term Loan
will mature twenty-four months after the First Drawdown Date. All amounts
outstanding under the Term Loan will bear interest, at Delta's option, at the
alternate base rate plus an applicable margin per annum or at the Eurodollar
rate plus an applicable margin per annum (such Eurodollar borrowings being
available to Delta in interest periods of 1, 2, 3 or 6 months). Interest
payments on base rate borrowings shall be made quarterly in arrears, whereas
interest payments on Eurodollar borrowings shall be made on the last day of
selected interest periods (which shall be one, two and six months) (every three
months, in the case of interest periods) of longer than three months. The
applicable margin to base rate and Eurodollar borrowings will vary between 0%
and 1.00% (in the case of alternate base rate borrowings) and between 0.75% and
2.00% (in the case of Eurodollar borrowings), in each case depending on the
rating applicable to Delta's long term senior unsecured debt as established
from time to time by Standard & Poor's and Moody's Investors Services. If such
ratings are below BBB- (in the case of Standard & Poor's) and Baa3 (in the case
of Moody's Investor Services), then Delta shall be required to maintain as of
the last day of each fiscal quarter a ratio (determined on a rolling
four-quarter basis) of (i) consolidated EBITDA plus aircraft operating rental
expense to (ii) consolidated interest expense plus aircraft operating rental
expense, of not less than 1.5 to 1.
Chase's commitment to fund Delta on the First Drawdown Date is subject to
a number of conditions, including (i )Chase's and CSI's completion of and
satisfaction in all respects with a due diligence investigation of Delta,
Comair and their respective subsidiaries, (ii) there not having been, since
September 30, 1999, any material adverse change in the condition or operations
of Delta and its subsidiaries, considered as a whole (on a pro forma basis
assuming consummation of the Offer and Merger), (iii) no information submitted
to Chase or CSI shall prove, when considered as a whole with all such
information so submitted, to have been inaccurate, incomplete or misleading in
any material respect, (iv) Chase and CSI not becoming aware after October 17,
1999 of any information or other matter (including any matter relating to
financial models and underlying assumptions relating to any projections
provided by Delta to
39
<PAGE>
Chase or CSI) that in their judgment is inconsistent in a material and adverse
manner with any information or other matter disclosed to them prior to October
17, 1999, (v) there not having occurred a material disruption of or material
adverse change in conditions in the financial, banking or capital markets that,
in Chase's and CSI's reasonable judgment, could impair the syndication of the
Term Loan, (vi) Chase's and CSI's satisfaction that, until the First Drawdown
Date, there shall be no competing offering, placement or arrangement of any
bank financing (including liquidity facilities) by or on behalf of Delta or any
of its affiliates (other than Comair), (vii) preparation of satisfactory
documentation relating to the Term Loan, (viii) consummation of the Offer, (ix)
the receipt by Delta and/or Comair of all necessary governmental and third
party consents and approvals in connection with the Term Loan and the Offer,
and the expiration of all applicable waiting periods, except in each case to
the extent that failure to obtain any such consent or approval would not have a
material adverse effect on Delta, Comair and their respective subsidiaries
considered as a whole (on a pro forma basis, assuming consummation of the Offer
and the Merger), (x) the absence of any litigation, investigation or proceeding
pending or threatened in any court or before any arbitrator or governmental
instrumentality (A) with respect to which there is a reasonable possibility of
an adverse decision that would be reasonably likely to have a material adverse
effect on the condition or operations of Delta, Comair and their respective
subsidiaries considered as a whole (on a pro forma basis, assuming consummation
of the Offer and the Merger) or (B) that purports to affect the validity or
binding effect of the Term Loan, (xi) payment of all fees due to CSI and Chase
in connection with the Term Loan and (xii) other customary closing conditions.
Chase's obligation to fund Delta on the Second Drawdown Date is contingent
upon the consummation of the Merger (with the aggregate cash consideration paid
to Comair shareholders in the Offer and the Merger not exceeding $1.9 billion)
and other customary conditions substantially similar to those that would be
applicable to borrowings under the 1997 Bank Credit Agreement, including
absence of any default and reaffirmation of representations and warranties,
except representations and warranties relating to material adverse change and
certain other matters. Delta may prepay the Term Loan in whole or in part at
any time, subject to payment by Delta of customary "broken funding" costs, if
any, associated with any prepayment of a Eurodollar loan other than at the end
of the applicable interest period. The Commitment Letter also provides that
Delta shall pay to Chase a commitment fee of 0.125% per annum on all unfunded
commitments under the Term Loan facility for the period beginning on the date
of execution of the definitive documentation for the Term Loan and ending on
the date on which no unfunded commitments remain in place.
The summary of certain provisions of the Commitment Letter does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to the Commitment Letter, a copy of which appears as Exhibit (a)(1)
to the Schedule 13E-3 and is incorporated herein by reference.
Dividends and Distributions
The Merger Agreement prohibits Comair from paying or declaring any
dividends on the Shares other than a regular quarterly dividend not in excess
of $0.03 per Share, declared no earlier than January 1, 2000 and only in the
event that Delta has not purchased Shares pursuant to the Offer by such time.
If, subsequent to the date of the Merger Agreement but prior to the
Effective Time, Comair changes the number of Shares outstanding as a result of
any stock split, stock dividend, recapitalization or similar transaction, then
appropriate adjustments shall be made in all amounts payable pursuant to the
Merger Agreement, including, without limitation, the Offer Price and the Merger
Consideration.
Certain Effects of the Offer
Market for the Shares
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
40
<PAGE>
Stock Quotation
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued inclusion in the Nasdaq
National Market System. If, as a result of the purchase of Shares pursuant to
the Offer, the Shares no longer meet the criteria for continued inclusion in
the Nasdaq National Market System, the market for the Shares could be adversely
affected. According to Nasdaq's published guidelines, the Shares would not meet
the criteria for continued inclusion in the Nasdaq's National Market System if
at least one of the following two standards are not met: (1) among other
things, a minimum of 750,000 publicly held Shares, an aggregate market value of
the publicly held Shares of at least $5 million and a minimum of 400
shareholders of round lots or (2), among other things, a minimum of 1,100,000
publicly held shares, an aggregate market value of the publicly held Shares of
at least $15 million, at least four registered and active market makers and a
minimum of 400 shareholders of round lots.
If one of these two standards were not met, quotations might continue to
be published in the over-the-counter "additional list" or one of the "local
lists" unless, as set forth in Nasdaq's published guidelines, the number of
publicly-held Shares (excluding Shares held by officers, directors and
beneficial owners of more than 10% of the Shares) is less than 100,000, there
are fewer than 300 holders in total, or there is not at least one market maker
for the Shares. If the Shares are no longer eligible for Nasdaq quotation,
quotations might still be available from other sources.
Exchange Act Registration
The Shares are currently registered under Section 12(g) of the Exchange
Act. Registration of the Shares under the Exchange Act may be terminated upon
application of Comair to the Commission if the Shares are not listed on a
national securities exchange and held by 300 or more holders of record.
Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by Comair to its
shareholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to Comair, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with shareholders' meetings and the related requirement of
furnishing an annual report to shareholders and the requirements of Rule 13e-3
under the Exchange Act with respect to "going private" transactions.
Furthermore, the ability of "affiliates" of Comair and persons holding
"restricted securities" of Comair to dispose of such securities pursuant to
Rule 144 or 144A promulgated under the Securities Act of 1933, may be impaired
or eliminated. If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be "margin securities" or be eligible
for inclusion in the Nasdaq National Market System. Delta and Kentucky Sub
currently intend to seek to cause Comair to terminate the registration of the
Shares under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration are met.
Margin Regulations
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. In
any event, the Shares will cease to be "margin securities" if registration of
the Shares under the Exchange Act is terminated.
Increased Interest in Net Book Value and Net Earnings of Comair
If the Offer is consummated, the direct and indirect interest of Delta in
Comair's net book value and net earnings will increase in proportion to the
number of Shares acquired in the Offer. Following consummation of the Merger,
Delta's direct and indirect interest in such items will increase to 100%, and
Comair will be an indirect, wholly owned subsidiary of Delta. Accordingly,
Delta and its subsidiaries will be entitled to all benefits resulting from that
interest, including all income generated by Comair's operations, and any future
increase in Comair's value and the right to elect
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all members of the Comair Board. Similarly, Delta will also bear the risk of
losses generated by Comair's operations and any decrease in the value of Comair
after the Merger. Furthermore, after the Merger, pre-Merger shareholders (other
than Delta) will not have the opportunity to participate directly in the
earnings and growth of Comair and will not face the risk of losses generated by
Comair's operations or decline in the value of Comair.
If all of the outstanding Shares are purchased pursuant to the Offer,
Delta's beneficial interest in the net book value (shareholders' equity) at
June 30, 1999 and net income of Comair for the three months ended June 30,
1999, as reflected in the Comair 10-Q, would increase to 100% or $443,183,488
and $43,161,669, respectively.
Certain Conditions of the Offer
Notwithstanding any other provision of the Offer, Delta and Kentucky Sub
shall not be required to accept for payment or pay for any Shares, and may
terminate the Offer, if:
(x) the Minimum Condition has not been satisfied by the Expiration Date,
(y) the applicable waiting period under the HSR Act shall not have expired
or been terminated by the Expiration Date, or
(z) at any time on or after October 17, 1999 and prior to the Expiration
Date, any of the following conditions exist:
(a) there shall be instituted or pending any action, suit,
investigation or proceeding by any government or governmental
authority or agency, domestic or foreign, before any court or
governmental authority or agency, domestic or foreign,
(i) challenging or seeking to make illegal, to delay materially
or otherwise directly or indirectly to restrain or prohibit
the making of the Offer, the acceptance for payment of or
payment for some of or all the Shares pursuant to the Offer
or the consummation of the Merger, or seeking to obtain
material damages in connection with the transactions
contemplated by the Offer or the Merger,
(ii) seeking to restrain, prohibit or terminate Comair's or, as
a result of the transactions contemplated by the Merger
Agreement, Delta's ownership, operation or lease (or that
of their respective subsidiaries or affiliates) of any
business, properties or assets which are material to the
business or operations, as such business or operations are
currently conducted, of Comair and its subsidiaries or of
Delta and its subsidiaries, as the case may be, or to
compel Comair or, as a result of the transactions
contemplated by the Merger Agreement, Delta or any of their
respective subsidiaries or affiliates to dispose of, cease
operating or hold separate any business, properties or
assets which are material to the business or operations, as
such business or operations are currently conducted, of
Comair and its subsidiaries or of Delta and its
subsidiaries, as the case may be,
(iii)seeking to impose limitations on the ability of Delta or
any of its subsidiaries or affiliates effectively to
exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired
or owned by Delta or any of its subsidiaries or affiliates
on all matters properly presented to Comair's shareholders,
(iv) seeking to require divestiture by Delta or any of its
subsidiaries or affiliates of any Shares, or
(v) that otherwise could reasonably be expected to have a
Material Adverse Effect (as defined in the Merger
Agreement); or
(b) there shall be in effect any judgment, decree or order of any
court or governmental authority or agency, domestic or foreign,
or any other legal restraint,
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(i) which makes illegal, delays materially or otherwise
restrains or prohibits the Offer, the acceptance for
payment of or payment for some or all of the Shares
pursuant to the Offer or the consummation of the Merger, or
imposes material damages in connection with the
transactions contemplated by the Offer or the Merger,
(ii) which restrains, prohibits or terminates Comair's or, as a
result of the transactions contemplated by the Merger
Agreement, Delta's ownership, operation or lease (or that
of their respective subsidiaries or affiliates) of any
business, properties or assets which are material to the
business or operations, as such business or operations are
currently conducted, of Comair and its subsidiaries or of
Delta and its subsidiaries, as the case may be, or which
compels Comair or, as a result of the transactions
contemplated by the Merger Agreement, Delta or any of their
respective subsidiaries or affiliates to dispose of, cease
operating or hold separate any business, properties or
assets which are material to the business or operations, as
such business or operations are currently conducted, of
Comair and its subsidiaries or of Delta and its
subsidiaries, as the case may be,
(iii)which imposes limitations on the ability of Delta or any of
its subsidiaries or affiliates effectively to exercise full
rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired or owned
by Delta or any of its subsidiaries or affiliates on all
matters properly presented to Comair's shareholders,
(iv) which requires divestiture by Delta or any of its
subsidiaries or affiliates of any Shares,
(v) that otherwise could reasonably be expected to have a
Material Adverse Effect; or
(c) there shall have been any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted,
enforced, promulgated, issued or deemed applicable to the Offer
or the Merger, by any court, government or governmental
authority or agency, domestic or foreign, other than the
application of the waiting period provisions of the HSR Act, to
the Offer or the Merger that is reasonably likely, directly or
indirectly, to result in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above; or
(d) there has been any event, occurrence or development or state of
circumstances or facts which has had or could reasonably be
expected to have a Material Adverse Effect; or
(e) Comair or any of its subsidiaries shall have breached or failed
to perform in any material respect any of its covenants or
agreements under the Merger Agreement, or any of the
representations and warranties of Comair set forth in the Merger
Agreement shall not be true in any material respect when made or
at any time prior to the expiration of the Offer as if made at
and as of such time (except as to any representation or warranty
which speaks as of a specific date, which must be untrue in any
material respect as of such date); or
(f) Comair or any of its subsidiaries shall have entered into or
amended, or agreed to enter into or amend, any Collective
Bargaining Agreement (as defined in the Merger Agreement) that
(i) contains any new or amended provision concerning scope of
work, successorship, change of control, job protection or
seniority integration that in the judgment of Delta would
adversely affect the Offer, the Merger or the other transactions
contemplated by the Merger Agreement or (ii) grants any
increases in compensation or contains any new or amended
provision concerning employee benefits, other than entering into
side letters in respect of issues under existing contracts or
agreements with unions representing employees of Comair or its
subsidiaries in the ordinary course of business consistent with
past practice and not relating to pay, benefits, scope of work,
successorship, change of control, merger, job protection and
seniority integration; or
(g) Comair or any of its subsidiaries shall have been notified by
the National Mediation Board, pursuant to Section 5, First of
the Railway Labor Act (45 U.S.C. ss.155, First), that the
National Mediation Board's
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mediatory efforts have failed, thereby commencing the thirty-day
period after which self-help would be permitted; or the National
Mediation Board shall have publicly stated that it intends or
plans to issue a notification to Comair on or about a specified
date; or
(h) Comair shall have entered into, or shall have publicly announced
its intention to enter into, any letter of intent, agreement in
principle, acquisition agreement or any other agreement relating
to an Acquisition Proposal; or
(i) Comair's Board or any committee thereof shall or shall resolve
to (x) not recommend, or withdraw its approval or recommendation
of, the Offer, the Merger, the Merger Agreement or any of the
transactions contemplated hereby, (y) modify or qualify such
approval or recommendation in a manner adverse to Delta or
Kentucky Sub, or (z) approve, recommend or fail to take a
position that is adverse to any proposed Acquisition Proposal
(or publicly propose to do any of the foregoing); or
(j) any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act) other than Delta and its subsidiaries shall have
acquired beneficial ownership of more than 20% of the
outstanding Shares; or
(k) there shall have occurred any general suspension of trading in,
or limitation on prices for, securities on the New York Stock
Exchange or in the over-the-counter market (other than any
temporary suspension pursuant to a circuit breaker procedure
then in effect and lasting for not more than three trading
hours), any declaration of a banking moratorium by Federal or
New York authorities or general suspension of payments in
respect of lenders that regularly participate in the U.S. market
in loans to large corporations, any material limitation by any
Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental
authority or agency in the United States that materially affects
the extension of credit generally by lenders that regularly
participate in the U.S. market in loans to large corporations,
any commencement of a war involving the United States or any
commencement of armed hostilities or other national or
international circumstance involving the United States that has
a material adverse effect on bank syndication or financial
markets in the United States or, in the case of any of the
foregoing occurrences existing on or at the time of the
commencement of the Offer, a material acceleration or worsening
thereof; or
(l) the Merger Agreement shall have been terminated in accordance
with its terms;
which, in the judgment of Delta in any such case, and regardless of the
circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Delta and Kentucky
Sub and may, subject to the terms of the Merger Agreement, be waived by Delta
and Kentucky Sub in whole or in part at any time and from time to time in their
discretion. The failure by Delta or Kentucky Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances, and each
such right shall be deemed an ongoing right that may be asserted at any time
and from time to time prior to the Effective Time.
Certain Legal Matters; Regulatory Approvals
General
Except as described in this Section, based on its review of publicly
available filings of Comair with the Commission and other publicly available
information regarding Comair, neither Delta nor Kentucky Sub is aware of any
license or regulatory permit that appears to be material to the business of
Comair and its subsidiaries, taken as a whole, that might be adversely affected
by Kentucky Sub's acquisitions of Shares (and/or the indirect acquisition of
the stock of Comair's subsidiaries) as contemplated herein or of any approval
or other action by or with any domestic, foreign, or international government
authority or administrative or regulatory agency that would be required for the
acquisition of ownership of the Shares (and/or the indirect acquisition of the
stock of Comair's subsidiaries) by
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Kentucky Sub. Should any such approval or other action be required, Delta and
Kentucky Sub currently contemplate that such approval or other action will be
sought. While, except as otherwise expressly described in this Section,
Kentucky Sub does not presently intend to delay the acceptance for payment of
or payment for Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained without substantial conditions or that failure to
obtain any such approval or other action might not result in consequences
adverse to Comair's business or that certain parts of Comair's business might
not have to be divested if such approvals were not obtained or such other
actions were not taken, any of which could cause Kentucky Sub to decline to
accept for payment or pay for any Shares tendered. Kentucky Sub's obligations
to accept for payment or pay for the Shares tendered pursuant to the Offer is
subject to the conditions set forth in this Offer to Purchase, including the
conditions referred to above in this paragraph and certain conditions with
respect to litigation and governmental action. See "The Tender Offer--Certain
Conditions of the Offer."
Litigation
Following the announcement that Comair, Delta and Kentucky Sub entered
into the Merger Agreement, two putative class actions on behalf of shareholders
of Comair were filed.
On or about October 19, 1999, an action styled Barkley v. Comair Holdings,
Inc., et al., No. 99 C 106214, was commenced by a purported Comair shareholder
in the Jefferson Circuit Court, Commonwealth of Kentucky. The complaint in the
Barkley action names as defendants Comair, the members of the Comair Board and
Delta and seeks to proceed on behalf of a purported class of Comair common
shareholders other than the defendants. The complaint alleges, among other
things, (1) that the members of the Comair Board breached their fiduciary
duties to Comair shareholders by agreeing to allegedly inadequate consideration
in the Merger Agreement; and (2) that Delta, which plaintiff alleges to be a
"controlling shareholder" of Comair, allegedly aided and abetted the foregoing
breaches of fiduciary duty, all of which allegedly has deprived Comair
shareholders of the highest value available to them for their Shares. The
complaint seeks to enjoin the Offer and the Merger, to rescind those
transactions if they are consummated; unspecified monetary damages; and costs
and attorneys' fees.
On October 20, 1999, an action styled Byrnes v. Castellini, et al., Index
No. 99-026095, was commenced by two purported Comair shareholders in the
Supreme Court of the State of New York for Nassau County, on behalf of a
purported class of Comair common shareholders other than defendants. The
complaint in the Byrnes action names as defendants Comair, the members of the
Comair Board and Delta. The complaint makes allegations and seeks relief
substantially similar to the allegations in the Barkley complaint and also
alleges that Delta breached fiduciary duties it owed directly to Comair
shareholders.
Comair, the Comair Board and Delta believe that the allegations and claims
asserted against them in these cases are without merit, and they intend to
defend these lawsuits vigorously.
Antitrust Compliance
Under the HSR Act, certain transactions (including certain transactions
involving the proposed acquisition of in excess of 15%, 25% and 50% of the
equity interest of a target corporation) may not be consummated unless certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied. Since consummation
of the Offer would result in the ownership by Delta and its subsidiaries of
more than 50% of the equity of Comair, the acquisition of Shares by Kentucky
Sub pursuant to the Offer is subject to such requirements.
Delta and Comair intend to file the required Notification and Report Forms
(the "Forms") with respect to the Offer and the Merger with the Antitrust
Division and the FTC promptly after commencement of the Offer. Delta and Comair
currently anticipate that the statutory waiting period applicable to the
purchase of Shares pursuant to the Offer will expire prior to November 19,
1999, the scheduled Expiration Date of the Offer. However, prior to such date,
the Antitrust Division or the FTC may extend the waiting period by requesting
additional information or documentary material relevant to the acquisition. If
such a request is made, the waiting period will be extended until 11:59 P.M.,
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New York City time, on the tenth day after Delta certifies to the Antitrust
Division or the FTC, as the case may be, that it has substantially complied
with such request. Thereafter, the waiting period can be extended only by court
order.
A request will be made for early termination of the waiting period
applicable to the Offer. There can be no assurance, however, that the 15-day
HSR Act waiting period will be terminated early or will not be extended.
The Merger would not require an additional filing under the HSR Act if
Kentucky Sub owns 50% or more of the shares outstanding at the time of the
Merger or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality
under the antitrust laws of transactions such as the proposed acquisition of
Shares by Kentucky Sub pursuant to the Offer. At any time before or after the
purchase of Shares pursuant to the Offer by Kentucky Sub, the FTC or the
Antitrust Division could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
purchase of Shares pursuant to the Offer or seeking the divestiture of Shares
purchased by Kentucky Sub or the divestiture of substantial assets of Delta,
Comair or their respective subsidiaries. Private parties and state attorneys
general may also bring legal action under federal or state antitrust laws under
certain circumstances. Based upon an examination of information available to
Delta relating to the businesses in which Delta, Comair and their respective
subsidiaries are engaged, Delta and Kentucky Sub believe that neither the Offer
nor the Merger will violate the antitrust laws. Nevertheless, there can be no
assurance what the result will be if a challenge is made. See "The Tender
Offer-- Certain Conditions of the Offer."
State Takeover Laws
A number of states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In 1982, in Edgar v. MITE Corp., the Supreme
Court of the United States invalidated on constitutional grounds the Illinois
Business Takeover Statute, which as a matter of state securities law made
takeovers of corporations meeting certain requirements more difficult. In 1987,
however, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that
the State of Indiana could, as a matter of corporate law and, in particular,
with respect to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of
a target corporation without the prior approval of the remaining shareholders.
The state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of shareholders in the state and
were incorporated there. Subsequently, a number of federal courts ruled that
various state takeover statutes were unconstitutional insofar as they apply to
corporations incorporated outside the state of enactment.
Section 271B.12-210 of the KBCA provides that, in addition to any vote
otherwise required by law or the articles of incorporation of the corporation,
a "business combination" of such corporation with an "interested shareholder"
shall either be approved by a majority of the "independent members" of the
board of directors who are also "continuing directors" or approved by the
affirmative vote of at least (i) eighty percent (80%) of the votes entitled to
be cast by outstanding shares of voting stock of the corporation, voting
together as a single voting group; and (ii) two-thirds of the votes entitled to
be cast by holders of voting stock other than voting stock beneficially owned
by the interested shareholder who is, or whose affiliate is, a party to the
business combination or by an affiliate or associate of such interested
shareholder, voting together as a single group, unless the business combination
is exempted from such voting requirements as a result of satisfying certain
provisions governing price, procedural and other matters. Section 271B.12-210
also provides that no corporation shall engage in any business combination with
any entity or person who is at the time of such business combination an
interested shareholder of such corporation for a period of five years following
the date on which such interested shareholder became an interested shareholder,
unless such business combination is approved by a majority of the independent
members of the board of directors of such corporation prior to such date on
which the interested shareholder became an interested shareholder.
A "business combination" under Section 271B.12-210 is defined generally to
include (i) unless the merger or consolidation does not alter the contract
rights of the stock as expressly set forth in the articles of incorporation
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or change or convert in whole or in part the outstanding shares of stock of the
corporation, any merger or consolidation of the corporation or any subsidiary
with any interested shareholder or any other corporation whether or not itself
an interested shareholder, which is, or after the merger or consolidation would
be, an affiliate or associate of an interested shareholder who was an
interested shareholder prior to the transaction; (ii) any sale, lease, transfer
or other disposition other than in the ordinary course of business, in one
transaction or a series of transactions in any twelve-month period, to any
interested shareholder or any affiliate or associate of an interested
shareholder other than the corporation or any subsidiaries, of any assets of
the corporation or any subsidiaries having, measured at the time the
transaction or transactions are approved by the board of directors of the
corporation, an aggregate book value as of the end of the corporation's most
recently ended fiscal quarter of five percent (5%) or more of the total market
value of the outstanding stock of the corporation, or of its net worth as of
the end of its most recently ended fiscal quarter; and (iii) other specified
transactions between the corporation or any of its subsidiaries and the
interested shareholder or any of its affiliates or associates, including
certain transactions regarding corporate stock issuances, liquidations or
dissolutions, reclassifications of securities and specified self-dealing
transactions. An "interested shareholder" is defined generally to include any
person who is, individually or with any of its affiliates or associates, the
beneficial owner, directly or indirectly, of 10% or more of the voting power of
the outstanding voting stock of the corporation. An "independent member" of the
board of directors of the corporation is defined generally as any director who
is not an officer or full-time employee of the corporation or an affiliate or
associate of an interested shareholder or any of its affiliates. A "continuing
director" is defined generally as a member of the board of directors who is not
an affiliate or associate of an interested shareholder or any of its affiliates
and who was a director of the corporation prior to the time the interested
shareholder became an interested shareholder, and certain qualified successors
of such director.
If KBCA Section 271B.12-210 were to apply, the fair value to which a
dissenting shareholder may be entitled in connection with the Merger would be
subject to certain minimum fair price provisions as provided under KBCA Section
271B.12-220.
The KBCA provides that a board of directors, in discharging its duties and
evaluating an acquisition proposal, may consider, in addition to the interests
of the corporation's shareholders, the interest of the corporation's employees,
suppliers, creditors and customers, the economy, community and societal
considerations, and other long-term and short-term interests of the corporation
and its shareholders.
By its terms, Section 271B.12-210 does not apply to the Offer. Delta
believes that the business combination provisions of Section 271B.12-210 of the
KBCA do not apply to the Merger because, pursuant to a resolution by both of
Delta and Comair dated June 20, 1988, Delta is deemed not to be an "interested
shareholder" within the meaning of Section 271B.12-210 of the KBCA.
Fees and Expenses
Except as set forth below, Delta and Kentucky Sub will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer.
Delta has retained the services of Goldman, Sachs & Co. to act as its
financial advisor and as Dealer Manager in connection with the Offer and the
Merger. Pursuant to the terms of Goldman, Sachs & Co.'s engagement, Delta has
agreed to pay Goldman, Sachs & Co. for its services as financial advisor and
Dealer Manager an aggregate fee of $10.75 million. Delta has also agreed to
reimburse Goldman, Sachs & Co. for its reasonable travel and other
out-of-pocket expenses, including those incurred in connection with Goldman,
Sachs & Co.'s activities as Dealer Manager and the fees and expenses of its
legal counsel, and to indemnify Goldman, Sachs & Co. and certain related
parties against certain liabilities, including liabilities under the federal
securities laws, arising out of Goldman, Sachs & Co.'s engagement.
Delta and Kentucky Sub have retained Morrow & Co., Inc. to be the
Information Agent and Harris Trust Company of New York to be the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telecopy, telegraph and personal interview and may request
banks, brokers, dealers and other nominees shareholders to forward materials
relating to the Offer to beneficial owners of Shares.
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As compensation for acting as Information Agent in connection with the
Offer, Morrow & Co., Inc. will be paid a fee of $7,500 and will also be
reimbursed for certain out-of-pocket expenses and may be indemnified against
certain liabilities and expenses in connection with the Offer, including
certain liabilities under the federal securities laws. Kentucky Sub will pay
the Depositary reasonable and customary compensation for its services in
connection with the Offer, plus reimbursement for out-of-pocket expenses, and
will indemnify the Depositary against certain liabilities and expenses in
connection therewith, including certain liabilities under federal securities
laws. Brokers, dealers, commercial banks and trust companies will be reimbursed
by Kentucky Sub for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
The following is an estimate of fees and expenses to be incurred by Delta
in connection with the Offer:
Financial Advisor/Dealer Manager.................................$10,750,000
Legal............................................................ 500,000
Printing......................................................... 56,000
Advertising...................................................... 75,000
Filing........................................................... 361,000
Depositary....................................................... 12,500
Information Agent (including mailing)............................ 12,000
Financing........................................................ 6,650,000
Miscellaneous.................................................... 10,000
-----------
Total.............................................$18,416,500
===========
Miscellaneous
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, Kentucky Sub may, in its discretion, take such
action as it may deem necessary to make the Offer in any such jurisdiction and
extend the Offer to holders of Shares in such jurisdiction. In any jurisdiction
the securities, blue sky or other laws of which require the Offer to be made by
a licensed broker or dealer, the Offer is being made on behalf of Kentucky Sub
by the Dealer Manager or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF DELTA, DELTA HOLDINGS OR KENTUCKY SUB NOT CONTAINED
HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Delta, Delta Holdings and Kentucky Sub have jointly filed with the
Commission a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
and a Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3"), pursuant
to Rules 14d-1 and 13e-3, respectively, under the Exchange Act, together with
exhibits furnishing certain additional information with respect to the Offer,
and may file amendments thereto. In addition, Comair has filed with the
Commission a Schedule 14D-9, together with exhibits, pursuant to Rule 14d-9
under the Exchange Act, setting forth the recommendations of the Comair Board
with respect to the Offer and the reasons for such recommendations and
furnishing certain additional related information. A copy of such documents,
and any amendments thereto, may be examined at, and copies may be obtained from
the Commission (but not the regional offices of the Commission) in the manner
set forth under "--Certain Information Concerning Delta, Delta Holdings and
Kentucky Sub" above.
KENTUCKY SUB, INC.
October 22, 1999
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SCHEDULES
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<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
COMAIR
The following table sets forth (i) the name, current business or residence
address and present principal occupation or employment, (ii) material
occupations, positions, offices or employments and business addresses thereof
for the past five years and (iii) information as to beneficial ownership of
Shares of each director and executive officer of Comair. Each of Comair's
directors and officers is a citizen of the United States. Except as otherwise
indicated, the business address of each director and executive officer of
Comair is Cincinnati/Northern Kentucky International Airport, P.O. Box 75021,
Cincinnati, OH 45275. Except as otherwise indicated, each occupation set forth
opposite a person's name refers to employment with Comair. Other than David R.
Mueller, who beneficially owns approximately 1.3% of the outstanding Shares, no
director or executive officer of Comair beneficially owns more than 1% of the
outstanding Shares. Directors of Comair are indicated with an asterisk.
<TABLE>
Beneficial
Name, Citizenship Present Principal Occupation or Employment; Material Position Ownership of
and Current Business Address Held During the Past Five Years and Business Addresses Thereof Shares(1)(2)
- ---------------------------- -------------------------------------------------------------- ------------
<S> <C> <C>
*Raymond A. Mueller.............. Mr. Mueller is a founder of Comair and served as 409,574 (3)
Chairman of the Board until his retirement in June 1990.
Mr. Mueller has served as a director since Comair's
inception. He was President from its inception through
May 1981 when he was named Chairman of the Board
and Chief Executive Officer, and served as Chief
Executive Officer until September 1983 and Chairman of
the Board until June 1990.
*Robert H. Castellini............ Director since 1989. Mr. Castellini is Chairman of 853,091 (4)
Castellini Company, a Cincinnati, Ohio-based food
distribution, food processing and transportation services
company and has been with Castellini Company for more
than five years. Mr. Castellini is also on the Ohio
Advisory Board of PNC Bank, Ohio, N.A.
*Christopher J. Murphy........... Director since 1989. Mr. Murphy is the Chairman, 98,851 (5)
President and Chief Executive Officer of 1st Source
Corporation. He has been with 1st Source for more than
five years. Mr. Murphy is also a director of Quality
Dining, Inc. and several privately-held corporations.
*Peter H. Forster................ Director since 1988. Mr. Forster has been affiliated with 91,133 (6)
the Dayton Power and Light Company, an electric and
natural gas utility company headquartered in Dayton,
Ohio, in various capacities since 1973. Mr. Forster served
as Chief Executive Officer of DPL, Inc. from April, 1984
until December, 1996. He has served as Chairman of the
Board of DPL, Inc. since 1988. Mr. Forster is also a
director of Amcast Industrial Corporation.
I-1
<PAGE>
*John A. Haas.................... Director since 1990. Mr. Haas was Group Vice President 87,337 (7)
of Ball Corporation from 1993 through 1995. He was
President and Chief Executive Officer of Ball Glass
Container Corporation since 1994 and President of Ball
Metal Container and Specialty Products Group, a
manufacturer of metal and glass packaging products, and
Chairman of the Board, President and Chief Executive
Officer since 1988 of Heekin Can, Inc., a Cincinnati-based
manufacturer, which was acquired by Ball Corporation.
*Gerald L. Wolken................ Director since 1989. Mr. Wolken has been Managing 58,095 (8)
partner of MLE Enterprises Inc., a management consulting
firm located in Ft. Myers, Florida since 1990. Previously
he served as President and Chief Executive Officer of
SuperX Drug Stores, as well as Corporate Vice President
of the Kroger Company. Mr. Wolken serves on the Board
of Directors for Service Management Systems, Intellitecs
International and Boys Hope/Girls Hope. He also serves
on the Advisory Boards of Health Resource Publishing
Company, U.S. Technology and Duramed Pharmaceutical
Company.
*David R. Mueller................ Mr. Mueller is a founder of Comair and has served as a 1,232,164 (9)
director since its inception. He served as Chief Operating
Officer from the Company's inception until May 1986.
Mr. Mueller was President from May 1981 through
October 1990. He has served as Chief Executive Officer
since September 1983. He was elected Chairman of the
Board and has held that position since June 1990.
*David A. Siebenburgen........... Director since 1988. Mr. Siebenburgen served as 468,845 (10)
Executive Vice President and Chief Operating Officer of
Comair from May 1986 to October 1990. Mr.
Siebenburgen was named President of Comair in October
1990. Mr. Siebenburgen was named Chief Executive
Officer of Comair, Inc., the principal subsidiary of Comair
in October 1997.
K. Michael Stuart................ Mr. Stuart is Senior Vice President for Aircraft 206,044 (11)
Operations.
Charles E. Curran, III........... Mr. Curran is Senior Vice President for Marketing. 181,150 (12)
Randy D. Rademacher.............. Mr. Rademacher is Senior Vice President of Finance and 195,075 (13)
Chief Financial Officer.
Linda E. Noble................... Ms. Noble is Senior Vice President for Human Resources 130,840 (14)
and Inflight Services.
- -------------------
* Represents Directors of Comair.
</TABLE>
I-2
<PAGE>
Notes:
(1) Information with respect to beneficial ownership is based upon information
furnished by each owner to Comair. Percent of Class is based on 96,567,688
Shares outstanding as of May 31, 1999.
(2) Unless otherwise indicated, each named person has voting and investment
power over the listed shares and such powers are exercised solely by the
named person or shared with a spouse.
(3) Does not include 1,232,164 shares held by David R. Mueller and his
children or shares held by Raymond A. Mueller's other emancipated children
and grandchildren as to which he disclaims beneficial ownership, but does
include 86,038 shares held in various trusts for the benefit of his
grandchildren, 51,840 shares held in a Family Limited partnership, 56,664
shares held by his spouse, and options for 79,744 shares exercisable
within 60 days of May 31, 1999.
(4) Includes 614,097 shares held in a Family Limited Partnership, 37,968
shares which are a part of a corporate profit sharing plan of which Mr.
Castellini is a participant, 2,876 shares which are held in IRA accounts
for Mr. Castellini and his spouse, and options for 79,744 shares
exercisable within 60 days of May 31, 1999.
(5) Includes options for 79,744 shares exercisable within 60 days of May 31,
1999.
(6) Includes 3,375 shares held by his spouse and options for 79,744 shares
exercisable within 60 days of May 31, 1999.
(7) Includes options for 79,744 shares exercisable within 60 days of May 31,
1999.
(8) Includes options for 56,960 shares exercisable within 60 days of May 31,
1999.
(9) Includes 48,091 shares held in Comair's 401(k) Program, 53,692 shares held
by his children, and 542,412 options for shares exercisable within 60 days
of May 31, 1999.
(10) Includes 19,146 shares held in Comair's 401(k) Program and options for
273,239 shares exercisable within 60 days of May 31, 1999.
(11) Includes 9,256 shares held in Comair's 401(k) Program, 44,925 shares held
by his spouse and options for 94,925 shares exercisable within 60 days of
May 31, 1999.
(12) Includes 1,045 shares held in Comair's 401(k) Program and options for
95,177 shares exercisable within 60 days of May 31, 1999.
(13) Includes 7,702 shares held in Comair's 401(k) Program and options for
155,083 shares exercisable within 60 days of May 31, 1999.
(14) Includes 5,563 shares held in Comair's 401(k) Program, 3,000 shares held
in a custodial account and options for 104,100 shares exercisable within
60 days of May 31, 1999.
I-3
<PAGE>
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF
DELTA, DELTA HOLDINGS AND KENTUCKY SUB
The following table sets forth (i) the name, current business or residence
address and present principal occupation or employment and (ii) material
occupations, positions, offices or employments and business addresses thereof
for the past five years, in each case of each director and executive officer of
Delta, Kentucky Sub and Delta Holdings, and persons who may be designated by
Delta to serve as directors on Comair's Board following the Offer and Merger.
Each of Delta's, Kentucky Sub's and Delta Holdings' directors and officers, and
each of the proposed directors and officers of Comair after consummation of the
Offer and the Merger, is a citizen of the United States.
Except as otherwise indicated, the business address of each director and
executive officer of Delta, Kentucky Sub and Delta Holdings is Delta Air Lines,
Inc., 1030 Delta Boulevard, Hartsfield Atlanta International Airport, Atlanta,
GA 30320. Except as otherwise indicated, each occupation set forth opposite a
person's name refers to employment with Delta, Kentucky Sub or Delta Holdings,
respectively. No director or executive officer of Delta, Kentucky Sub or Delta
Holdings beneficially owns any material amount of outstanding Shares. Directors
of each of Delta, Kentucky Sub and Delta Holdings are indicated with an
asterisk.
A. Directors and Executive Officers of Delta.
<TABLE>
Name, Citizenship Present Principal Occupation or Employment; Material Position
and Current Business Address Held During the Past Five Years and Business Addresses Thereof
- ---------------------------- --------------------------------------------------------------
<S> <C>
*Edwin L. Artzt................... Director since 1991. Mr. Artzt has been Chairman of the Board of
Spalding Holdings Corporation since August 1998. He was
Chairman of the Board and Chief Executive Officer of The Procter &
Gamble Company from January 1990 until his retirement in July
1995. He was Chairman of the Executive Committee of the Board of
Directors of The Procter & Gamble Company from July 1995 until
his retirement from that Board in September 1999. Mr. Artzt is also a
director of American Express Company, Evenflo Company, Inc. and
GTE Corporation, and a member of The Business Council.
*Henry A. Biedenharn, III......... Director since 1986. President and Chief Executive Officer and a
director of Ouachita Coca-Cola Bottling Company, Inc., and four
other Coca-Cola bottling companies located in Arkansas, Louisiana
and Mississippi, from 1981 until his retirement in February 1996. He
also served as Chairman of the Board of Ouachita Coca Cola Bottling
Company, Inc. from 1991 to February 1996. Mr. Biedenharn is a
director of Hudson, Inc. and Biedco Corporation.
*James L. Broadhead............... Director since 1991. Chairman of the Board and Chief Executive
Officer of FPL Group, Inc., and its principal subsidiary, Florida
Power & Light Company, since May 1990. Mr. Broadhead is also a
director of New York Life Insurance Company and The Pittston
Company, a trustee of Cornell University and a member of The
Business Council and The Business Roundtable.
*Edward H. Budd................... Director since 1985. Chairman of the Board and Chief Executive
Officer of The Travelers Corporation from 1982 until his retirement
in 1994, and was an executive officer of that company from 1974
through 1993. Mr. Budd is also a director of GTE Corporation, a
member of the American Academy of Actuaries and The Business
Council, and a Trustee of Tufts University.
II-1
<PAGE>
*R. Eugene Cartledge........................ Director since 1990. Mr. Cartledge has been Chairman of the Board
of Generac Portable Products, Inc. since June 1998. Chairman of the
Board of Savannah Foods & Industries, Inc. from April 1996 until
December 1997. Mr. Cartledge was Chairman of the Board and
Chief Executive Officer of Union Camp Corporation from January
1986 until his retirement in June 1994. He is also a director of
Blount, Inc., Chase Brass Industries, Inc., Sun Company, Inc. and
UCAR International Inc.
*Mary Johnston Evans........................ Director since 1982 and non-executive Acting Chairman of Board of
Directors from August 1, 1997 to August 14, 1997. She is also a
Director of Baxter International Inc., Dun & Bradstreet Corp.,
Household International, Inc. and Sun Company Inc. Mrs. Evans is
also a senior member of the Conference Board.
*David R. Goode............................. Director since April 22, 1999. Mr. Goode has been Chairman,
President and Chief Executive Officer of Norfolk Southern
Corporation since 1992, and an executive officer of that company
since 1985. Mr. Goode is also a director of Caterpillar, Inc., Georgia
Pacific Corporation and Texas Instruments, Incorporated, and a
member of the Business Council and The Business Roundtable.
*Gerald Grinstein........................... Director since 1987. Non-Executive Chairman of Board of Directors
since August 14, 1997. Mr. Grinstein has been a principal of
Madrona Investment Group, L.L.C. since October 1996 and is the
non-executive Chairman of the Board of Agilent Technologies, Inc.
Mr. Grinstein was Chairman of Burlington Northern Santa Fe
Corporation (successor to Burlington Northern Inc.) from September
1995 until his retirement in December 1995. He was an executive
officer of Burlington Northern Inc. and certain affiliated companies
from April 1987 until consummation of the merger of Burlington
Northern Inc. and Santa Fe Corporation in September 1995. He is
also a director of Imperial Sugar Company, PACCAR Inc., The
Pittston Company and Vans, Inc.
*Leo F. Mullin.............................. Mr. Mullin has been a director, President and Chief Executive Officer
since August 14, 1997. He was Vice Chairman of Unicom
Corporation and its principal subsidiary, Commonwealth Edison
Company, from 1995 through August 13, 1997. Mr. Mullin was an
executive of First Chicago Corporation from 1981 to 1995, serving as
that company's President and Chief Operating Officer from 1993 to
1995, and as Chairman and Chief Executive Officer of American
National Bank, a subsidiary of First Chicago Corporation, from 1991
to 1993. He is also a director of BellSouth Corporation, Johnson &
Johnson, a member of the Board of the Air Transport Association of
America and a member of the board and Chairman-designate of the
International Air Transport Association. He is also a member of The
Business Council, The Business Roundtable and the President's
Export Council.
*Andrew J. Young............................ Director since 1994. Mr. Young has been Co-Chairman and a senior
partner of Goodworks International, Inc. since January 1997. He was
Vice Chairman of Law Companies Group, Inc. from 1993 through
January 1997, and a director of that company from August 1995
through January 1997. Chairman of Law Companies Group, Inc. (a
former subsidiary of Law Companies Group, Inc.) from 1990 to
1993. Mr. Young is a director of African Continental
Telecommunications Holding Limited, Archer Daniels Midland
Company, Cox Communications, Inc., Film Fabricators, Inc., Host
Marriott Corporation, The ARGUS Board (The International
II-2
<PAGE>
Advisory Board of Independent Newspapers Holdings Limited) and
Thomas Nelson, Inc. He is Chairman of the Southern Africa
Enterprise Development Fund, a member of the Georgia Tech
Advisory Board and a director of the Martin Luther King, Jr. Center.
Malcolm B. Armstrong........................ Executive Vice President-Operations since October 1, 1998. Mr.
Armstrong was Vice President-Corporate Safety & Compliance of
Delta from June 1997 until October 1998. He was Vice President-
Corporate Safety and Compliance of US Airways, Inc. from July
1995 until June 1997. Prior to joining US Airways, Inc., he was a Lt.
General in the U.S. Air Force from 1992 to June 1995.
Robert L. Colman............................ Executive Vice President-Human Resources since October 2, 1998.
Prior to joining Delta, Mr. Colman was Vice President-Human
Resources, General Electric Aircraft Engines Business from October
1993 until October 1998.
Vicki B. Escarra............................ Executive Vice President-Customer Service since July 1, 1998.
Senior Vice President-Airport Customer Service of Delta, November
1996 through June 1998. Vice President-Airport Customer Service,
August 1996 through October 1996. Vice President-Reservation
Sales and Distribution Planning, May 1996 through July 1996. Vice
President-Reservation Sales, November 1994 to May 1996. Director-
Reservations Sales, October 1994 to November 1994. Director-In-
Flight Service Operations, May 1992 to October 1994.
Frederick W. Reid........................... Executive Vice President and Chief Marketing Officer since July 1,
1998. Mr. Reid was an executive of Lufthansa German Airlines from
April, 1991 to June, 1998, serving as that company's President and
Chief Operating Officer from April 1997 to June 1998; Executive
Vice President from 1996 to March 1997, and as Senior Vice
President, The Americas, from 1991 to 1996.
Edward H. West.............................. Executive Vice President and Chief Financial Officer since
September 16, 1999; Chief Financial Officer, September 7, 1999
through September 15, 1999; Senior Vice President - Corporate
Strategy and Business Development, July 1999 through September 6,
1999; Vice President - Financial Planning and Analysis, April 1998
through June 1999; Chief Financial Officer (Acting), December 1997
to April 1998; Vice President - Financial Planning and Analysis, June
1997 through November 1997; Controller, November 1996 through
May 1997; Director - Corporate Finance, December 1995 through
October 1996; General Manager - Corporate Finance, January 1995
through November 1995; Assistant to the Senior Vice President -
Finance and Chief Financial Officer, June 1994 through December
1994. Prior to joining Delta in 1994, Mr. West had a seven year
career in corporate banking.
- -------------------
* Represents Directors of Delta.
</TABLE>
II-3
<PAGE>
B. Directors and Executive Officers of Kentucky Sub.
<TABLE>
Name, Citizenship Present Principal Occupation or Employment; Material Position
and Current Business Address Held During the Past Five Years and Business Addresses Thereof
- ---------------------------- --------------------------------------------------------------
<S> <C>
* Robert S. Harkey................Senior Vice President - General Counsel and Secretary of Delta,
November 1994 to date; Senior Vice President - General Counsel of
Delta, November 1990 through October 1994; Vice President -
General Counsel of Delta, November 1988 through October 1990.
* Edward H. West..................President. Mr. West has served as Executive Vice President and
Chief Financial Officer of Delta since September 16, 1999; Chief
Financial Officer of Delta, September 7, 1999 through September 15,
1999; Senior Vice President - Corporate Strategy and Business
Development of Delta, July 1999 through September 6, 1999; Vice
President - Financial Planning and Analysis of Delta, April 1998
through June 1999; Chief Financial Officer (Acting) of Delta,
December 1997 to April 1998; Vice President - Financial Planning
and Analysis of Delta, November 1996 through May 1997; Director -
Corporate Finance of Delta December 1995 through October 1996;
General Manager - Corporate Finance of Delta, January 1995 through
November 1995; Assistant to the Senior Vice President - Finance and
Chief Financial Officer of Delta, June 1994 through December 1994.
Prior to joining Delta in 1994, Mr. West had a seven year career in
corporate banking. Age 33.
M. Michele Burns..................Vice President and Treasurer. Ms. Burns has served as Vice
President and Treasurer of Delta since September 15, 1999; and Vice
President - Corporate Taxes from January 18, 1999 to September 16,
1999. She served as a partner of Arthur Andersen LLP in charge of
its Southern U.S. region federal tax business practice from 1991 to
January 17, 1999.
Dean C. Arvidson..................Secretary. Mr. Arvidson has served as Senior Attorney and Assistant
Secretary with Delta since January 1996; Attorney and Assistant
Secretary from November 1994 until January 1996; and Attorney
from November 1992 until November 1994.
- -------------------
* Represents Directors of Kentucky Sub.
</TABLE>
II-4
<PAGE>
C. Directors and Executive Officers of Delta Holdings.
<TABLE>
Name, Citizenship Present Principal Occupation or Employment; Material Position
and Current Business Address Held During the Past Five Years and Business Addresses Thereof
- ---------------------------- --------------------------------------------------------------
<S> <C>
* Edward J. Jones.......................... President. Mr. Jones has been Vice Chairman of Delaware Corporate
Delaware Corporate Management, Inc. Management, Inc. since July 1998. Prior thereto, Mr. Jones was
1105 North Market Street, Suite 1300 President of Delaware Corporate Management, Inc. from 1990
Wilmington, DE 19801 through June 1998.
* Leslie P. Klemperer....................... Vice President and Secretary. He has been Associate General
Counsel and Assistant Secretary of Delta since November 1998. Mr.
Klemperer was Assistant General Counsel and Assistant Secretary of
Delta from February 1992 through October 1998; and Senior
Attorney and Assistant Secretary from November 1985 until February
1992.
* David P. Fontello........................ Vice President and Assistant Secretary. Mr. Fontello has been Vice
Wilmington Trust Company President-Corporate Financial Services Department, Wilmington
Rodney Square North Trust Company since 1972.
1100 North Market Street
Wilmington, DE 19890
* Maria D'Alessandro........................ Treasurer. Ms. D'Alessandro has been General Manager-Treasury of
Delta since May 1998. Prior thereto, Ms. D'Alessandro was General
Manager-Cash Management of Delta from February 1997 until May
1998; Manager-Financial Analysis from May 1995 until February
1997; Project Leader from June 1994 until May 1995; and Financial
Analyst from August 1993 until June 1994.
* Thomas M. Strauss........................ Assistant Treasurer. Mr. Strauss has been Director Client Services of
Wilmington Trust Company Delaware Corporate Management since April 1998; Financial
Rodney Square North Services Manager of Delaware Corporate Management from 1997
1105 North Market Street, Suite 1300 through March 1998. Prior thereto, Mr. Strauss was Accounting
Wilmington, DE 19801 Supervisor with Wilmington Trust Company from 1996 to 1997;
Senior Accountant from 1994 to 1996; and Staff Accountant from
1992 to 1994.
- -------------------
* Represents Directors of Delta Holdings.
</TABLE>
II-5
<PAGE>
D. Persons Who May Be Designated by Delta to Serve as Directors on Comair's
Board After the Offer and Merger.
<TABLE>
Name, Citizenship Present Principal Occupation or Employment; Material Position
and Current Business Address Held During the Past Five Years and Business Addresses Thereof
- ---------------------------- --------------------------------------------------------------
<S> <C>
Malcolm B. Armstrong..............See above for his positions with Delta and previous five
year employment history.
Vicki B. Escarra..................See above for her positions with Delta and previous five
year employment history.
Frederick W. Reid.................See above for his positions with Delta and previous five
year employment history.
Edward H. West....................See above for his positions with Delta and previous five
year employment history.
</TABLE>
II-6
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be accepted.
The Letter of Transmittal, Share Certificates and any other required documents
should be sent or delivered by each shareholder of Comair or such shareholder's
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at its addresses set forth below.
The Depositary for the Offer is:
Harris Trust Company of New York
<TABLE>
<S> <C> <C>
By Facsimile Transmission
By Mail: (For Eligible Institutions only): By Hand or Overnight Courier:
Wall Street Station (212) 701-7636 Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>
Confirm by Telephone:
(212) 701-7624
Questions or requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth below. Shareholders may also contact their broker, dealer, commercial
bank or trust company for assistance concerning the Offer. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other related materials
may also be obtained from the Information Agent or the Dealer Manager and will
be furnished promptly at Delta's expense.
The Information Agent for the Offer is:
Morrow & Co., Inc.
445 Park Avenue
5th Floor
New York, New York 10022
Shareholders Please Call:
(800) 566-9061 (Toll Free)
Banks and Brokers Please Call:
(800) 662-5200 (Toll Free)
(212) 754-8000 (Call Collect)
The Dealer Manager for the Offer is:
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
(212) 902-1000 (Call Collect)
(800) 323-5678 (Toll Free)
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
Comair Holdings, Inc.
Pursuant to the Offer to Purchase
dated October 22, 199
of
Kentucky Sub, Inc.,
a wholly owned, indirect subsidiary of
Delta Air Lines, Inc.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 19, 1999 UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
To: Harris Trust Company of New York, Depositary
By Mail: By Facsimile: By Hand/Overnight Delivery:
Wall Street Station (212) 701-7636 Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
For Information Telephone:
(212) 701-7624
Delivery of this instrument to an address other than as set forth above or
transmission of instructions to a facsimile number other than as set forth
above will not constitute a valid delivery to the Depositary.
This Letter of Transmittal is to be used if certificates for Shares (as
defined below) are to be forwarded herewith or, unless an Agent's Message (as
defined in the Offer to Purchase) is utilized, if delivery of Shares is to be
made by book-entry transfer to the Depositary's account at The Depository Trust
Company (hereinafter referred to as the "Book-Entry Transfer Facility"),
pursuant to the procedures set forth in the section of the Offer to Purchase
entitled "Procedures for Accepting the Offer and Tendering Shares."
Shareholders who cannot deliver their Shares and all other documents
required hereby to the Depositary by the Expiration Date (as defined in the
Offer to Purchase) must tender their Shares pursuant to the guaranteed delivery
procedure set forth in the section of the Offer to Purchase entitled
"Procedures for Accepting the Offer and Tendering Shares." See Instruction 2.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
<PAGE>
DESCRIPTION OF SHARES TENDERED
<TABLE>
- -----------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) Shares Tendered
(Please fill in, if blank) (Attach additional list if necessary)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Number of Shares Number of
Certificate Represented by Shares
Number(s)* Certificate(s)* Tendered**
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Total Shares
- -----------------------------------------------------------------------------------------------------
- ---------
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, all Shares represented by any certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution
----------------------------------------------
Account No. at The Depository Trust Company
--------------------------------
Transaction Code No.
-------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Shareholder(s)
----------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-------------------------
Name of Institution which Guaranteed Delivery
------------------------------
If delivery is by book-entry transfer:
Name of Tendering Institution
-----------------------------------------
Account No. at The Depository Trust Company
---------------------------
Transaction Code No.
--------------------------------------------------
-----------------------
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Kentucky Sub, Inc., a Kentucky
corporation ("Kentucky Sub") and a wholly owned, indirect subsidiary of Delta
Air Lines, Inc., a Delaware corporation, the above-described shares of common
stock, no par value (the "Shares"), of Comair Holdings, Inc., a Kentucky
corporation ("Comair"), pursuant to Kentucky Sub's offer to purchase all
outstanding Shares at a price of $23.50 per Share, net to the seller in cash,
without interest thereon upon the terms and subject to the conditions set forth
in the Offer to Purchase dated October 22, 1999, receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer"). Kentucky Sub reserves the right to transfer or assign, in whole or
from time to time in part, to one or more of its affiliates the right to
purchase Shares tendered pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer and effective
upon acceptance for payment of and payment for the Shares tendered herewith,
the undersigned hereby sells, assigns and transfers to or upon the order of
Kentucky Sub all right, title and interest in and to all the Shares that are
being tendered hereby (and any and all other non-cash dividends, distributions,
rights and other securities issued or issuable in respect thereof on or after
October 17, 1999) and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and all such
other Shares or securities), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) deliver certificates for such Shares (and all such other Shares or
securities), or transfer ownership of such Shares (and all such other Shares or
securities) on the account books maintained by the Book-Entry Transfer
Facility, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Kentucky Sub, (b) present
such Shares (and all such other Shares or securities) for transfer on the books
of Comair and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and all such other Shares or securities),
all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Edward H. West , M. Michele
Burns and Dean C. Arvidson, and each of them, and any other assignees of
Kentucky Sub, the attorneys and proxies of the undersigned, each with full
power of substitution, to exercise all voting and other rights of the
undersigned in such manner as each such attorney and proxy or his substitute
shall in his sole discretion deem proper, with respect to all of the Shares
tendered hereby which have been accepted for payment by Kentucky Sub prior to
the time of any vote or other action (and any and all other Shares or other
securities issued or issuable in respect thereof on or after October 17, 1999),
at any meeting of shareholders of Comair (whether annual or special and whether
or not an adjourned meeting), by written consent or otherwise. This proxy is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Kentucky Sub in accordance with the
terms of the Offer. Such acceptance for payment shall revoke any other power of
attorney, proxy or written consent granted by the undersigned at any time with
respect to such Shares (and all such other Shares or other securities), and no
subsequent proxies will be given or written consents will be executed by the
undersigned (and if given or executed, will not be deemed to be effective).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares or other securities or rights
issued or issuable in respect thereof on or after October 17, 1999), and that,
when the same are accepted for payment by Kentucky Sub, Kentucky Sub will
acquire good, marketable and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claims. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Depositary or Kentucky Sub to be necessary or desirable
to complete or confirm the sale, assignment and transfer of the Shares tendered
hereby (and all such other Shares or securities or rights).
3
<PAGE>
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in the section of the Offer to Purchase entitled
"Procedures for Accepting the Offer and Tendering Shares" and in the
instructions hereto will constitute a binding agreement between the undersigned
and Kentucky Sub upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price of any Shares purchased, and
return any Shares not tendered or not purchased, in the name(s) of the
undersigned. Similarly, unless otherwise indicated herein under "Special
Delivery Instructions," please mail the check for the purchase price of any
Shares purchased and any certificates for Shares not tendered or not purchased
(and accompanying documents, as appropriate) to the undersigned at the address
shown below the undersigned's signature. In the event that both "Special
Payment Instructions" and "Special Delivery Instructions" are completed, please
issue the check for the purchase price of any Shares purchased and return any
Shares not tendered or not purchased in the name(s) of, and mail said check and
any certificates to, the person(s) so indicated. The undersigned recognizes
that Kentucky Sub has no obligation, pursuant to the "Special Payment
Instructions," to transfer any Shares from the name of the registered holder(s)
thereof if Kentucky Sub does not accept for payment any of the Shares so
tendered.
4
<PAGE>
<TABLE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6, 7 and 8) (See Instructions 1, 5, 6, 7 and 8)
<S> <C>
To be completed ONLY if the check for the purchase To be completed ONLY if the check for the purchase
price of Shares purchased (less the amount of any price of Shares purchased (less the amount of any
federal income and backup withholding tax required federal income and backup withholding tax required to
to be withheld) and/or certificates for Shares not tendered be withheld) or certificates for Shares not tendered or
or not purchased are to be issued in the name of not purchased are to be mailed to someone other than
someone other than the undersigned. the undersigned or to the undersigned at an address
other than that shown below the undersigned's signature(s).
Issue [ ] check Mail [ ] check
[ ] certificates to: [ ] certificates to:
Name................................................ Name................................................
(Please Print) (Please Print)
Address............................................. Address..............................................
.................................................... .....................................................
(Zip Code) (Zip Code)
....................................................
(Taxpayer Identification No. or Social Security No.)
(also complete substitute Form W-9 below)
</TABLE>
5
<PAGE>
SIGN HERE
(Please complete Substitute Form W-9 below)
..........................................................
..........................................................
Signature(s) of Owners
Dated.........................................., 1999
Name(s)...................................................
..........................................................
(Please Print)
Capacity (full title).....................................
Address...................................................
..........................................................
(Include Zip Code)
----> <----
Area Code and Telephone Number............................
(Must be signed by registered holder(s) exactly as name(s)
appear(s) on stock certificate(s) or on a security position
listing or by person(s) authorized to become registered
holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer
of a corporation or other person acting in a fiduciary or
representative capacity, please set forth full title and
see Instruction 5.)
Guarantee of Signatures(s)
(If required; see Instructions 1 and 5)
Name of Firm.............................................
Authorized Signature.....................................
Dated.........................................., 1999
6
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE
FORM W-9 Part I Taxpayer Identification No.-- For All Accounts Part II For Payees Exempt
...................................................................... From Backup With-
Department of the Treasury Enter your taxpayer identification --------------------- holding (see enclosed
Internal Revenue Service number in the appropriate box. For Guidelines)
most individuals and sole proprietors, this is ---------------------
your Social Security Number. For other entities, Social Security Number
it is your Employer Identification Number. If
Payer's Request for you do not have a number, see "How to Obtain a OR
Taxpayer Identification No. TIN" in the enclosed Guidelines Note: If the
account is in more than one name, see the chart ---------------------
on page 2 of the enclosed Guidelines to
determine what number to enter. ---------------------
Employee Identification
Number
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and either (a) I
have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service Center
or Social Security Administration Office or (b) I intend to mail or
deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I
provide a number;
(2) I am not subject to backup withholding either because (a) I am exempt
from backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding; and
(3) Any information provided on this form is true, correct and complete.
Certification Instructions. -- You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2).
- -------------------------------------------------------------------------------
SIGNATURE DATE , 1999
------------------------------ -----------------------------
- -------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is
a member of a recognized Medallion Signature Guarantee Program approved by The
Securities Transfer Associations, Inc. (an "Eligible Institution"). Signatures
on this Letter of Transmittal need not be guaranteed (a) if this Letter of
Transmittal is signed by the registered holder(s) of the Shares (which term,
for purposes of this document, shall include any participant in the Book-Entry
Transfer Facility whose name appears on a security position listing as the
owner of Shares) tendered herewith and such holder(s) have not completed the
instructions entitled "Special Payment Instructions" or "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of an Eligible Institution. See Instructions 5 and 7.
2. Delivery of Letter of Transmittal and Shares. This Letter of
Transmittal is to be used either if certificates are to be forwarded herewith
or, unless an Agent's Message is utilized, if delivery of Shares is to be made
by book-entry transfer pursuant to the procedures set forth in the section of
the Offer to Purchase entitled "Procedures for Accepting the Offer and
Tendering Shares." Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, as well as
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or, in the case of a book-entry transfer, an Agent's Message) and any
other documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the front page of this Letter
of Transmittal prior to the Expiration Date (as defined in the Offer to
Purchase).
Shareholders who cannot deliver their Shares and all other required
documents to the Depositary by the Expiration Date must tender their Shares
pursuant to the guaranteed delivery procedure set forth in the section of the
Offer to Purchase entitled "Procedures for Accepting the Offer and Tendering
Shares." Pursuant to such procedure: (a) such tender must be made by or through
an Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by Kentucky Sub must be
received by the Depositary prior to the Expiration Date and (c) the
certificates for all physically delivered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered electronically, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof or, in
the case of a book-entry delivery, an Agent's Message) and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three Nasdaq National Market System trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in the section
of the Offer to Purchase entitled "Procedures for Accepting the Offer and
Tendering Shares."
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK- ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF CERTIFICATES FOR
SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal
(or a facsimile thereof), the tendering shareholder waives any right to receive
any notice of the acceptance of its Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by
book-entry transfer). If fewer than all the Shares represented by any
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares which
8
<PAGE>
are to be tendered in the box entitled "Number of Shares Tendered." In such
case, a new certificate for the remainder of the Shares represented by the old
certificate will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as promptly as practicable following the expiration or termination of the
Offer. All Shares represented by certificates delivered to the Depositary will
be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby is held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution as defined in
Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificates for such Shares. Signature(s) on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to Kentucky Sub of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. Kentucky Sub will pay any stock transfer taxes
with respect to the sale and transfer of any Shares to it or its order pursuant
to the Offer. If, however, payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be returned in the name of, any
person other than the registered holder(s), or if a transfer tax is imposed for
any reason other than the sale or transfer of Shares to Kentucky Sub pursuant
to the Offer, then the amount of any stock transfer taxes (whether imposed on
the registered holder(s), such other person or otherwise) will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes,
or exemption therefrom, is submitted herewith.
7. Special Payment and Delivery Instructions. If the check for the
purchase price of any Shares purchased is to be issued, or any Shares not
tendered or not purchased are to be returned, in the name of a person other
than the person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that
shown on page two above, the appropriate boxes on this Letter of Transmittal
should be completed. Shareholders tendering Shares by book-entry transfer may
request that Shares not purchased be credited to such account at the Book-Entry
Transfer Facility as such shareholder may designate under "Special Payment
Instructions". If no such instructions are given, any such Shares not purchased
will be returned by crediting the account at the Book-Entry Transfer Facility
designated above.
8. Substitute Form W-9. Under the federal income tax laws, the Depositary
will be required to withhold 31% of the amount of any payments made to certain
shareholders pursuant to the Offer. In order to avoid such backup withholding,
each tendering shareholder, and, if applicable, each other payee, must provide
the Depositary with such
9
<PAGE>
shareholder's or payee's correct taxpayer identification number and certify
that such shareholder or payee is not subject to such backup withholding by
completing the Substitute Form W-9 set forth above. In general, if a
shareholder or payee is an individual, the taxpayer identification number is
the Social Security number of such individual. If the Depositary is not
provided with the correct taxpayer identification number, the shareholder or
payee may be subject to a $50 penalty imposed by the Internal Revenue Service.
Certain shareholders or payees (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order to satisfy the Depositary that a foreign
individual qualifies as an exempt recipient, such shareholder or payee must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Such statements can be obtained from the
Depositary. For further information concerning backup withholding and
instructions for completing the Substitute Form W-9 (including how to obtain a
taxpayer identification number if you do not have one and how to complete the
Substitute Form W-9 if Shares are held in more than one name), consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Shares to be deemed invalidly tendered, but may require the Depositary to
withhold 31% of the amount of any payments made pursuant to the Offer. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained provided that the required information is furnished to
the Internal Revenue Service. NOTE: FAILURE TO COMPLETE AND RETURN THE
SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
9. Requests for Assistance or Additional Copies. Requests for assistance
or additional copies of the Offer to Purchase and this Letter of Transmittal
and other tender offer materials may be obtained from the Information Agent or
the Dealer Manager at their respective addresses or telephone numbers set forth
below.
10
<PAGE>
The Information Agent is:
Morrow & Co., Inc.
445 Park Avenue
New York, New York 10022
Shareholders Please Call:
(800) 566-9061 (Toll Free)
Banks and Brokers Please Call:
(800) 662-5200 (Toll Free)
(212) 754-8000 (Call Collect)
The Dealer Manager is:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
(800) 323-5678 (Toll Free)
(212) 902-1000 (Call Collect)
11
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
in respect of
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Comair Holdings, Inc.
at
$23.50 Net Per Share
by
Kentucky Sub, Inc.,
a wholly owned, indirect subsidiary of
Delta Air Lines, Inc.
This form, or a form substantially equivalent to this form, must be used
to accept the Offer (as defined below) if the shares of common stock, no par
value, of Comair Holdings, Inc. and all other documents required by the Letter
of Transmittal cannot be delivered to the Depositary by the expiration of the
Offer. Such form may be delivered by hand or facsimile transmission or mail to
the Depositary. See the section of the Offer to Purchase entitled "Procedures
for Accepting the Offer and Tendering Shares."
To: Harris Trust Company of New York, Depositary
By Mail: Facsimile: By Hand/Overnight Delivery:
Wall Street Station (212) 701-7636 Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
For Information Telephone:
(212) 701-7624
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Kentucky Sub, Inc., a Kentucky
corporation ("Kentucky Sub") and a wholly owned, indirect subsidiary of Delta
Air Lines, Inc., upon the terms and subject to the conditions set forth in the
Offer to Purchase dated October 22, 1999 and the related Letter of Transmittal
(which together constitute the "Offer"), receipt of which is hereby
acknowledged, __________________ shares of common stock, no par value (the
"Shares"), of Comair Holdings, Inc., a Kentucky corporation, pursuant to the
guaranteed delivery procedure set forth in the section of the Offer to Purchase
entitled "Procedures for Accepting the Offer and Tendering Shares."
Certificate Nos. (if available) SIGN HERE
- ----------------------------------------- -----------------------------------
Signature(s)
- ----------------------------------------- -----------------------------------
(Name(s)) (Please Print)
If Shares will be tendered by book-entry
transfer: -----------------------------------
(Address)
Name of Tendering Institution:
- ----------------------------------------- -----------------------------------
(City, State and Zip Code)
Account No. at The Depository Trust
Company:
- ----------------------------------------- -----------------------------------
(Area Code and Telephone No.)
2
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
a commercial bank or trust company having an office or correspondent in the
United States, guarantees (a) that the above named person(s) "own(s)" the
Shares tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, (b) that such tender of Shares complies with Rule 14e-4
and (c) to deliver to the Depositary the Shares tendered hereby, together with
a properly completed and duly executed Letter(s) of Transmittal (or
facsimile(s) thereof) or an Agent's Message (as defined in the Offer to
Purchase) in the case of a book-entry delivery and any other required
documents, all within three Nasdaq National Market System trading days of the
date hereof.
--------------------------------------------------
(Name of Firm)
--------------------------------------------------
(Authorized Signature)
--------------------------------------------------
(Name) (Please Print)
--------------------------------------------------
(Address)
--------------------------------------------------
(City, State and Zip Code)
--------------------------------------------------
(Area Code and Telephone No.)
Dated: , 1999.
----------------------
3
EXHIBIT (a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Comair Holdings, Inc.
at
$23.50 Net Per Share
by
Kentucky Sub, Inc.,
a wholly owned, indirect subsidiary of
Delta Air Lines, Inc.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 19, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
October 22, 1999
To Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees:
We have been appointed by Kentucky Sub, Inc., a Kentucky corporation
("Kentucky Sub") and a wholly owned, indirect subsidiary of Delta Air Lines,
Inc., to act as Dealer Manager in connection with its offer to purchase all
outstanding shares of common stock, no par value (the "Shares"), of Comair
Holdings, Inc., a Kentucky corporation ("Comair"), at $23.50 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
Kentucky Sub's Offer to Purchase dated October 22, 1999 and the related Letter
of Transmittal (which together constitute the "Offer").
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated October 22, 1999;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to
Purchase);
4. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the Offer; and
<PAGE>
5. Return envelope addressed to Harris Trust Company of New York, the
Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 19, 1999, UNLESS THE OFFER IS EXTENDED.
Kentucky Sub will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager, the Information Agent or the
Depositary as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. Kentucky Sub will, however, upon request,
reimburse brokers, dealers, commercial banks and trust companies for reasonable
and necessary costs and expenses incurred by them in forwarding materials to
their customers. Kentucky Sub will pay all stock transfer taxes applicable to
its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
In order to accept the Offer, a duly executed and properly completed
Letter of Transmittal and any required signature guarantees, or an Agent's
Message (as defined in the Offer to Purchase) in connection with a book-entry
delivery of Shares, and any other required documents, should be sent in a
timely fashion so as to be received by the Depositary by 12:00 midnight, New
York City time, on Friday, November 19, 1999.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover of the Offer to Purchase.
Very truly yours,
GOLDMAN, SACHS & CO.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU, OR ANY OTHER PERSON, THE AGENT OF KENTUCKY SUB, INC., DELTA AIR LINES,
INC., THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY
AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE
ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
2
EXHIBIT (a)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Comair Holdings, Inc.
at
$23.50 Net Per Share
by
Kentucky Sub, Inc.,
a wholly owned indirect subsidiary of
Delta Air Lines, Inc.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 19, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
October 22, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated October
22, 1999 and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the offer by Kentucky Sub, Inc., a Kentucky
corporation ("Kentucky Sub") and a wholly owned, indirect subsidiary of Delta
Air Lines, Inc., to purchase for cash all outstanding shares of common stock,
no par value (the "Shares"), of Comair Holdings, Inc., a Kentucky corporation
("Comair"). We are the holder of record of Shares held for your account. A
tender of such Shares can be made only by us as the holder of record and
pursuant to your instructions. The Letter of Transmittal is furnished to you
for your information only and cannot be used by you to tender Shares held by us
for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the Letter of Transmittal.
Your attention is invited to the following:
1. The tender price is $23.50 per Share, net to you in cash.
2. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Friday, November 19, 1999, unless the Offer is
extended.
3. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date (as
defined in the Offer to Purchase) a number of Shares which, when
taken
<PAGE>
together with Shares owned by Delta or its affiliates, represent at
least two-thirds of the then issued and outstanding Shares on a fully
diluted basis.
4. Any stock transfer taxes applicable to the sale of Shares to Kentucky
Sub pursuant to the Offer will be paid by Kentucky Sub, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any or all of your Shares, please so
instruct us by completing, executing, detaching and returning to us the
instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all
such Shares will be tendered unless you otherwise specify on the detachable
part hereof. Your instructions should be forwarded to us in ample time to
permit us to submit a tender on your behalf by the expiration of the Offer.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction.
Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by Harris Trust Company of New York (the
"Depositary") of
(a) Share Certificates or timely confirmation of the book-entry
transfer of such Shares into the account maintained by the Depositary
at The Depository Trust Company (the "Book-Entry Transfer Facility"),
pursuant to the procedures set forth in the section of the Offer to
Purchase entitled "Procedures for Accepting the Offer and Tendering
Shares,"
(b) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, by us, the registered holder of your
Shares with any required signature guarantees or an Agent's Message
(as defined in the Offer to Purchase), in connection with a
book-entry delivery, and
(c) any other documents required by the Letter of Transmittal.
Accordingly, payment may not be made to all tendering shareholders at the
same time depending upon when certificates for or confirmations of book-entry
transfer of such Shares into the Depositary's account at the Book- Entry
Transfer Facility are actually received by the Depositary.
2
<PAGE>
Instructions with Respect to
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Comair Holdings, Inc.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated October 22, 1999, and the related Letter of
Transmittal, in connection with the offer by Kentucky Sub, Inc. to purchase all
outstanding shares of common stock, no par value (the "Shares"), of Comair
Holdings, Inc.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
Number of Shares to be Tendered: SIGN HERE
Shares*
- ----------------------------------- -----------------------------------
Signature(s)
Dated , 1999
------------------------------ -----------------------------------
-----------------------------------
-----------------------------------
Please print name(s) and
address(es) here
- --------
*Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
Give the Give the
For this type of account SOCIAL SECURITY For this type of account EMPLOYER IDENTIFICATION
number of: number of:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 6. A valid trust, estate, or Legal entity (Do not furnish the
pension trust identifying number of the
personal representative or trustee
unless the legal entity itself is not
designated in the account title).4
2. Two or more individuals The actual owner of the 7. Corporate account The corporation
(joint account) account or, if combined
funds, the first individual
on the account1
3. Custodian account of a The minor2 8. Association, club, religious, The organization
minor (Uniform Gift to charitable, educational or
Minors Act) other tax-exempt
organization account
4. a. The usual revocable The grantor-trustee1 9. Partnership account The partnership
savings trust account
(grantor is also
trustee)
b. So-called trust The actual owner1 10. A broker or registered The broker or nominee
account that is not a nominee
legal or valid trust
under State law
5. Sole proprietorship The owner3 11. Account with the Department The public entity
account of Agriculture in the name of
a public entity (such as a
State or local government,
school district or prison) that
receives agricultural program
payments
- ------------------------------------------------------------------------------------------------------------------------------------
1 List first and circle the name of the person whose number you furnish.
2 Circle the minor's name and furnish the minor's social security number.
3 You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your social security
number or employer identification number.
4 List first and circle the name of the legal trust, estate, or pension
trust.
Note: if no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
</TABLE>
12
<PAGE>
How to Obtain a TIN
- -------------------
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5 (or, in the case of resident aliens who do not have
and are not eligible for Social Security numbers, Form W-7, Application for
Individual Taxpayer Identification Number), Application for a Social Security
Number Card, or Form SS-4, Application for Employer Identification Number, at
the local office of the Social Security Administration or the Internal Revenue
Service and apply for a number.
Payees Exempt from Backup Withholding
- -------------------------------------
Even if the payee does not provide a TIN in the manner required, you are not
required to backup withhold on any payments you make if the payee is:
o An organization exempt from tax under section 501(a), any IRA, or a
custodial account under section 403(b)(7) if the account satisfies the
requirements of Section 401(f)(2).
o The United States or any of its agencies or instrumentalities.
o A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
o A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
o An international organization or any of its agencies or instrumentalities.
Other payees that may be exempt from backup withholding include:
o A corporation.
o A foreign central bank of issue.
o A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
o A futures commission merchant registered with the Commodity Futures
Trading Commission.
o A real estate investment trust.
o An entity registered at all times during the tax year under the Investment
Company Act of 1940.
o A common trust fund operated by a bank under section 584(a).
o A financial institution.
o A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
o A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
o Payments of patronage dividends not paid in money.
o Payments made by certain foreign organizations.
o Section 404(k) distributions made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade of business and you
have not provided your correct taxpayer identification number to the
payer.
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Mortgage interest paid to you.
13
<PAGE>
Exempt payees described above should file Substitute Form W-9 to avoid possible
erroneous backup withholding. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM IN PART II, SIGN AND DATE THE FORM, AND
RETURN IT TO THE PAYER.
Certain payments, other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045 and 6050A.
Privacy Act Notice. -- Section 6109 requires most recipients of dividend,
interest or other payments to give their correct taxpayer identification
numbers to payers who must report the payments to the IRS. The IRS uses the
numbers for identification purposes and to help verify the accuracy of tax
returns. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
- ---------
(1) Penalty for Failure to Furnish Taxpayer Identification Number. -- If you
fail to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. --
Wilfully falsifying certifications or affirmations may
subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
14
EXHIBIT (a)(7)
This announcement is not an offer to purchase or a solicitation of an offer to
sell Shares. The Offer is made solely by the Offer to Purchase dated October
22, 1999 and the related Letter of Transmittal and is not being made to, nor
will tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making of the Offer or acceptance thereof would not
be in compliance with the laws of such jurisdiction. In those jurisdictions
where the applicable laws require that the Offer be made by a licensed broker
or dealer, the Offer shall be deemed to be made on behalf of Kentucky Sub by
the Dealer Manager or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Comair Holdings, Inc.
at
$23.50 Net per Share
by
Kentucky Sub, Inc.
an indirect, wholly owned subsidiary of
Delta Air Lines, Inc.
Kentucky Sub, Inc., a Kentucky corporation ("Kentucky Sub") and an
indirect, wholly owned subsidiary of Delta Air Lines, Inc., a Delaware
corporation ("Delta"), is offering to purchase any and all issued and
outstanding shares of common stock, no par value (the "Shares"), of Comair
Holdings, Inc., a Kentucky corporation ("Comair"), at a price of $23.50 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated October 22, 1999 (the "Offer to
Purchase") and in the related Letter of Transmittal (which together constitute
the "Offer").
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 19, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the
Offer to Purchase) a number of Shares which, together with the Shares then
owned by Delta and its affiliates, represents at least two-thirds of the Shares
outstanding on a fully diluted basis. The Offer is being made pursuant to an
Agreement and Plan of Merger dated as of October 17, 1999 (the "Merger
Agreement"), among Comair, Delta and Kentucky Sub. The Merger Agreement
provides, among other things, that as soon as practicable after the
consummation of the Offer, Kentucky Sub will be merged with and into Comair
(the "Merger"), with Comair continuing as the surviving corporation. Pursuant
to the Merger, each outstanding Share (other than Shares held by Comair as
treasury shares or Shares owned by Delta or its affiliates, which will in
either case be canceled and no payment made with respect thereto, and other
than Shares, if any, held by shareholders who have properly exercised
dissenters' rights in accordance with Kentucky law) will be converted into a
right to receive $23.50 in cash without interest.
THE BOARD OF DIRECTORS OF COMAIR HAS UNANIMOUSLY APPROVED AND ADOPTED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER, AND DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO, AND IN
THE BEST INTERESTS OF, COMAIR AND THE HOLDERS OF SHARES (OTHER THAN DELTA AND
ITS AFFILIATES), AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
Morgan Stanley Dean Witter ("Morgan Stanley") has delivered to the Board
of Directors of Comair its written opinion as investment bankers that, as of
the date of such opinion and based on and subject to the matters stated in such
opinion, the consideration to be received by the holders of Shares pursuant to
the Merger Agreement is fair from a financial point of view to such holders
(other than Delta and its affiliates). See the Offer to Purchase for further
information concerning the opinion of Morgan Stanley.
The purpose of the Offer is for Delta to increase its ownership of Comair
from approximately 22.06% to 100%. The Offer is subject to certain conditions
set forth in the Offer to Purchase. If any such condition is not satisfied,
Kentucky Sub may (i) terminate the Offer and return all tendered Shares to
tendering stockholders, (ii) extend the Offer and, subject to withdrawal rights
as set forth below, retain all such Shares until the expiration of the Offer as
so extended or (iii) waive such condition and, subject to any requirement to
extend the time during which the Offer is open, purchase all Shares validly
tendered prior to the Expiration Date and not withdrawn. Kentucky Sub reserves
the right, at any time or from time to time, to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to Harris Trust Company of New York, the Depositary. Any such
extension will be followed as promptly as practicable by public announcement
thereof.
For purposes of the Offer, Kentucky Sub shall be deemed to have accepted
for payment tendered Shares when, as and if Kentucky Sub gives oral or written
notice to the Depositary of its acceptance of the tenders of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of certificates for such Shares (or a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as
<PAGE>
defined in the Offer to Purchase)), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other required documents.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after December 20, 1999, unless theretofore accepted
for payment as provided in the Offer to Purchase. To be effective, a written,
telegraphic, or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase and must specify the name of the person who tendered
the Shares to be withdrawn and the number of Shares to be withdrawn and the
name of the registered holder of such Shares, if different from that of the
person who tendered such Shares. If the Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, a signed notice of
withdrawal with (except in the case of Shares tendered by an Eligible
Institution (as defined in the Offer to Purchase)) signatures guaranteed by an
Eligible Institution must be submitted prior to the release of such Shares. In
addition, such notice must specify, in the case of Shares tendered by delivery
of certificates, the name of the registered holder (if different from that of
the tendering shareholder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934 is contained in the Offer to Purchase and is incorporated herein by
reference.
A request is being made to Comair for the use of its shareholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear
on the shareholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase and Letter of Transmittal contain important
information which should be read before any decision is made with respect to
the Offer.
Requests for copies of the Offer to Purchase and the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be furnished
promptly at Kentucky Sub's expense. Questions or requests for assistance may be
directed to the Information Agent.
The Information Agent for the Offer is:
Morrow & Co., Inc.
445 Park Avenue
New York, NY 10022
Shareholders Please Call:
(800) 566-9061 (Toll Free)
Banks and Brokerage Firms Please Call:
(800) 662-5200 (Toll Free)
(212) 754-8000 (Call Collect)
The Dealer Manager for the Offer is:
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
(212) 902-1000 (Call Collect)
October 22, 1999
EXHIBIT (b)(1)
[GRAPHIC OMITTED (CHASE LOGO)]
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
THE CHASE MANHATTAN BANK
270 Park Avenue
New York, New York 10017
October 17, 1999
$1,900,000,000 Term Loan
Commitment Letter
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
Attention: Edward H. West
Executive Vice President and
Chief Financial Officer
Ladies and Gentlemen:
Delta Air Lines, Inc. (the "Buyer" or the "Borrower") has advised Chase
Securities Inc. ("CSI") and The Chase Manhattan Bank ("Chase") that the Buyer
intends to acquire (the "Acquisition") all of the outstanding common stock of
Comair Holdings, Inc. (the "Target") not already owned by it for cash
consideration not to exceed $1,900,000,000. References herein to the
"Acquisition" shall include the financings described herein and all other
transactions related to the Acquisition. You have also advised us that you wish
to obtain a senior unsecured term loan (the "Term Loan") in the amount of up to
$1,900,000,000 to provide financing for the Acquisition.
<PAGE>
CSI is pleased to advise you that it is willing to act as lead arranger
and book manager for the Term Loan, and Chase is pleased to advise you of its
commitment to provide the entire amount of the Term Loan. The Statement of
Terms and Conditions attached as Exhibit A hereto (the "Term Sheet") sets forth
the principal terms and conditions on and subject to which Chase is willing to
make available the Term Loan.
It is agreed that Chase will act as the sole and exclusive administrative
agent in respect of the Term Loan, and that CSI will act as lead arranger and
book manager in respect of the Term Loan, and each will, in such capacities,
perform the duties and exercise the authority customarily performed and
exercised by it in such roles. You agree that no other agents, co-agents or
arrangers will be appointed (it being understood that Citibank, N.A. may act as
syndication agent), no other titles will be awarded and no compensation (other
than that expressly contemplated by the Fee Letter referred to below) will be
paid in connection with the Term Loan unless you and we shall so agree.
We intend to syndicate the Term Loan to a group of financial institutions
(together with Chase, the "Lenders") identified by us and reasonably acceptable
to you. CSI intends to commence syndication efforts promptly, and you agree
actively to assist CSI in completing a syndication satisfactory to it. Such
assistance shall include (a) your using commercially reasonable efforts to
ensure that the syndication efforts benefit materially from your existing
lending relationships, (b) direct contact between your senior management and
advisors and the proposed Lenders, (c) assistance in the preparation of a
Confidential Information Memorandum and other marketing materials to be used in
connection with the syndication and (d) the hosting, with CSI, of one or more
conference calls with prospective Lenders.
CSI will manage all aspects of the syndication in consultation with you,
including decisions as to the selection of institutions to be approached and
when they will be approached, when their commitments will be accepted, which
institutions will participate, the allocations of the commitments among the
Lenders and the amount and distribution of fees among the Lenders. To assist
CSI in its syndication efforts, you agree promptly to prepare and provide to
CSI and Chase such information with respect to the Borrower, the Target, the
Acquisition and the other transactions contemplated hereby, including financial
information and projections (the "Projections"), as we may reasonably request
in connection with the arrangement and syndication of the Term Loan. You hereby
represent and covenant that (a) all information other than the Projections (the
"Information") that has been or will be made available to Chase or CSI by you
or any of your representatives, as supplemented from time to time prior to the
Closing Date (as such term is defined in the Term Sheet), shall be complete and
correct in all material respects and does not or will not, as so supplemented,
2
<PAGE>
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements are made,
provided that, in the case of Information relating to the Target, this
representation and covenant is being given only as to the Borrower's actual
knowledge, and (b) the Projections that have been or will be made available to
Chase or CSI by you or any of your representatives have been or will be
prepared in good faith based upon reasonable assumptions. You understand that
in arranging and syndicating the Term Loan we may use and rely on the
Information and Projections without independent verification thereof. The
effectiveness of this paragraph and the two preceding paragraphs shall survive
the execution and delivery of definitive financing documentation.
As consideration for Chase's commitment hereunder and CSI's agreement to
perform the services described herein, you agree to pay to Chase the
nonrefundable fees set forth in the Fee Letter (the "Fee Letter") delivered
herewith.
Chase's commitment hereunder and CSI's agreement to perform the services
described herein are subject to (i) our completion of and satisfaction in all
respects with a due diligence investigation of the Borrower, the Target and
their respective subsidiaries, (ii) there not having been, since September 30,
1999, any material adverse change in the condition or operations of the Buyer
and its subsidiaries, considered as a whole (on a pro forma basis assuming
consummation of the Acquisition), (iii) our not becoming aware after the date
hereof of any information or other matter (including any matter relating to
financial models and underlying assumptions relating to the Projections) that
in our judgment is inconsistent in a material and adverse manner with any
information or other matter disclosed to us prior to the date hereof, (iv)
there not having occurred a material disruption of or material adverse change
in conditions in the financial, banking or capital markets that, in our
reasonable judgment, could impair the syndication of the Term Loan, (v) our
satisfaction that, until the Closing Date, there shall be no competing
offering, placement or arrangement of any bank financing (including liquidity
facilities) by or on behalf of the Borrower or any of its affiliates (other
than the Target), and (vi) the other conditions set forth or referred to in the
Term Sheet. Such commitment and agreement of Chase and CSI are also subject to
the satisfactory negotiation, execution and delivery of loan documents for the
Term Loan on or prior to November 17, 1999, which shall be based upon and
substantially consistent with the Term Sheet and, except as otherwise
specifically contemplated hereby or by the Term Sheet, shall be substantially
similar to the Existing Credit Agreement (as defined in the Term Sheet).
3
<PAGE>
You agree (a) to indemnify and hold harmless Chase, CSI, their affiliates
and their respective officers, directors, employees, advisors, and agents
(each, an "indemnified person") from and against any and all losses, claims,
damages and liabilities to which any such indemnified person may become subject
arising out of or in connection with this Commitment Letter, the Term Loan, the
use of the proceeds thereof, the Acquisition or any related transaction or any
claim, litigation, investigation or proceeding relating to any of the
foregoing, regardless of whether any indemnified person is a party thereto, and
to reimburse each indemnified person upon demand for any legal or other
expenses incurred in connection with investigating or defending any of the
foregoing, provided that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities or related
expenses to the extent they are found by a final, non-appealable judgment of a
court to arise from the willful misconduct or gross negligence of such
indemnified person, and (b) to reimburse Chase, CSI and their affiliates on
demand for all reasonable out-of-pocket expenses (including syndication
expenses and reasonable fees, charges and disbursements of counsel) incurred in
connection with the Term Loan and any related documentation (including this
Commitment Letter and the definitive financing documentation). No indemnified
person shall be liable for any damages arising from the use by others of
Information or other materials obtained through electronic, telecommunications
or other information transmission systems or for any special, indirect,
consequential or punitive damages in connection with the Term Loan.
You acknowledge that Chase and its affiliates (the term "Chase" as used
below in this paragraph being understood to include such affiliates) may be
providing debt financing, equity capital or other services (including financial
advisory services) to other companies in respect of which you may have
conflicting interests regarding the transactions described herein and
otherwise. Chase will not use confidential information obtained from you by
virtue of the transactions contemplated by this Commitment Letter or its other
relationships with you in connection with the performance by Chase of services
for other companies, and Chase will not furnish any such information to other
companies. Chase further confirms that it will comply with its obligations
under the confidentiality agreement dated October 15, 1999 previously delivered
to you. You also acknowledge that Chase has no obligation to use in connection
with the transactions contemplated by this Commitment Letter, or to furnish to
you, confidential information obtained from other companies.
This Commitment Letter shall not be assignable by you without the prior
written consent of Chase and CSI (and any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of
the parties hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by you,
4
<PAGE>
Chase and CSI. This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature
page of this Commitment Letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof. This Commitment Letter and
the Fee Letter are the only agreements that have been entered into among us
with respect to the Term Loan and set forth the entire understanding of the
parties with respect thereto. This Commitment Letter shall be governed by, and
construed in accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you at your request on the
understanding that neither this Commitment Letter, the Term Sheet or the Fee
Letter nor any of their terms or substance shall be disclosed, directly or
indirectly, to any other person except (a) to the officers, agents and advisors
of the Buyer who are directly involved in the consideration of this matter, (b)
in the case of the Commitment Letter and the Term Sheet only, to the officers,
agents and advisors of the Target who are directly involved in the
consideration of this matter, on a confidential basis, or (c) as may be
compelled in a judicial or administrative proceeding or as otherwise required
by law (in which case you agree to inform us promptly thereof), provided, that
the foregoing restrictions shall cease to apply (except in respect of the Fee
Letter and its terms and substance) after this Commitment Letter has been
accepted by you.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force
and effect regardless of whether definitive financing documentation shall be
executed and delivered and notwithstanding the termination of this Commitment
Letter or Chase's commitment hereunder.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter, not later
than 5:00 p.m., New York City time, on October 20, 1999. This offer will
automatically expire at such time in the event we have not received such
executed counterparts in accordance with the immediately preceding sentence.
5
<PAGE>
We are pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
CHASE SECURITIES INC.
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By:
------------------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
DELTA AIR LINES, INC.
By:
-----------------------------------
Name:
Title:
6
<PAGE>
EXHIBIT A
[GRAPHIC OMITTED (CHASE LOGO)]
DELTA AIR LINES, INC.
$1,900,000,000 TERM LOAN
TERM SHEET
Delta Air Lines, Inc. intends to acquire (the "Acquisition") all of the
outstanding common stock of Comair Holdings, Inc. (the "Target") not already
owned by it for cash consideration not to exceed $1,900,000,000. References
herein to the "Acquisition" shall include the financings described herein and
all other transactions related to the Acquisition. Set forth below is a summary
of terms and conditions for a senior unsecured term loan to be used to provide
financing for the Acquisition.
Borrower: Delta Air Lines, Inc. (the "Buyer" or the "Borrower").
Lead Arranger and Book Chase Securities Inc. ("CSI"; in such capacity, the
Manager: "Arranger").
Administrative Agent: The Chase Manhattan Bank ("Chase"; in such
capacity, the "Administrative Agent").
Lenders: Chase and/or other financial institutions selected by
the Arranger and reasonably acceptable to the Borrower.
Amount of Term Loan: Senior unsecured term loan of up to $1.9 billion (the
"Term Loan").
Purpose/Use of Proceeds: To finance a portion of the cash consideration to be
paid in connection with the Acquisition and to pay
related fees and expenses.
Final Maturity of Term Twenty-four months following the Closing Date (as
Loan: defined below).
Availability: Term Loan may be funded in two drawings, on the Closing
Date and on the date on which the Target shall become
a wholly owned subsidiary of the Borrower pursuant to
a merger transaction (the "Merger"). Notwithstanding
the foregoing, all unfunded commitments in respect of
the Term Loan
1
<PAGE>
shall automatically terminate on the 120th day after
the Closing Date.
Amortization: None.
Interest Rate: All amounts outstanding under the Term Loan shall bear
interest, at the Borrower's option, as follows:
A. at the Alternate Base Rate ("ABR") plus the
Applicable Margin per annum; or
B. at the Eurodollar Rate plus the Applicable
Margin per annum.
The Applicable Margin shall be determined based upon
the Borrower's long term senior unsecured debt ratings
from time to time as established by Standard & Poor's
(the "S&P Rating") and Moody's Investors Services (the
"Moody's Rating") as set forth below:
-------------------------------------------------------
Eurodollar ABR
Applicable Applicable
Level Rating Margin Margin
-------------------------------------------------------
1 BBB+ or 0.75% 0%
higher or
Baal or
higher
-------------------------------------------------------
2 BBB or 0.875% 0%
Baa2
-------------------------------------------------------
3 BBB- or 1.00% 0%
Baa3
-------------------------------------------------------
4 BB+ or Ba1 1.25% 0.25%
-------------------------------------------------------
5 BB or lower 2.00% 1.00%
or Ba2 or
lower
-------------------------------------------------------
The Administrative Agent shall determine the
Applicable Margin from time to time in accordance with
the above table and notify the Borrower and the
Lenders of such determination from time to time. In
2
<PAGE>
the event the S&P Rating and the Moody's Rating
correspond to different levels on the above table
resulting in different Applicable Margin
determinations, the following provisions shall apply.
In the event the S&P Rating and the Moody's Rating
differ by one level, the Applicable Margin shall be
that corresponding to the higher Rating. In the event
the S&P Rating and the Moody's Rating differ by two
levels the Applicable Margin shall be that
corresponding to that level which is in between the
two applicable levels. In the event the S&P Rating and
the Moody's Rating differ by three levels, the
Applicable Margin shall be that corresponding to the
level immediately below the higher of such Ratings. In
the event the S&P Rating and the Moody's Rating differ
by four levels (i.e. a ratings split between level 1
and level 5), the Applicable Margin shall be that
corresponding to level 4.
In the event only one rating agency exists or
continues rating the Borrower's long term senior
unsecured debt, such agency's rating shall be used for
purposes of the above table. In the event: (i) neither
agency exists or continues rating the Borrower's long
term senior unsecured debt or (ii) the Borrower no
longer has any outstanding long term senior unsecured
debt to be rated, the Applicable Margin for the first
90 days after such occurrence shall be the Applicable
Margin in effect as determined using the above
immediately prior to such occurrence. During such
90-day period, the Administrative Agent and the
Borrower shall negotiate in good faith to agree upon a
new pricing grid or other appropriate pricing terms.
Any such new grid or pricing terms shall be approved
by the Requisite Lenders. In the event the
Administrative Agent, the Borrower and the Requisite
Lenders cannot agree upon such new pricing grid or
pricing terms by the end of such 90-day period, the
Applicable Margin shall be that corresponding to level
5 of the above table for the remainder of the term of
the Term Loan.
Any necessary adjustment in the Applicable Margin
pursuant to the terms hereof shall become effective
immediately upon any change in a rating.
3
<PAGE>
A commitment fee shall be payable to the Lenders at
the rate of 0.125% per annum in respect of the period
commencing on the date of execution of the Credit
Agreement and ending on the date on which no unfunded
commitments remain in effect. The Borrower shall have
the right to terminate or reduce the amount of the
unfunded commitments at any time.
Other provisions with respect to interest rates,
funding protection, taxes and reserve requirements,
capital adequacy protection, and similar matters shall
be substantially similar to those contained in the
Existing Credit Agreement.
Interest Payments: Quarterly for loans bearing interest with reference to
the ABR, on the last day of selected interest periods
(which shall be one, two, three and six months) for
loans bearing interest with reference to the
Eurodollar Rate (and at the end of every three months,
in the case of interest periods of longer than three
months), and upon prepayment; in each case payable in
arrears and computed on a basis consistent with the
Borrower's existing Credit Agreement dated as of May
2, 1997, as amended through the date hereof (the
"Existing Credit Agreement").
Voluntary Prepayment: The Term Loan may be prepaid in whole or in part
(provided that with respect to loans bearing interest
with reference to the Eurodollar Rate prepaid other
than at the end of the applicable interest period, the
Borrower will pay customary "broken funding" costs, if
any, on terms substantially similar to those contained
in the Existing Credit Agreement).
Representations and Substantially similar to those contained
Warranties: in the Existing Credit Agreement and, on a basis
consistent with the tenor and scope of such
representations and warranties, such additional
representations and warranties relating to the
Acquisition as are appropriate.
Covenants: Substantially similar to those contained in the
Existing Credit Agreement.
4
<PAGE>
In addition, at any time when the S&P Rating is less
than BBB- and the Moody's Rating is less than Baa3,
the Borrower will be required to maintain as of the
last day of each fiscal quarter a ratio (determined on
a rolling four-quarter basis) of (a) Consolidated
EBITDA plus aircraft operating rental expense to (b)
consolidated interest expense plus aircraft operating
rental expense, of not less than 1.5 to 1.
In the event that any negative covenants contained in
the Existing Credit Agreement, as amended or replaced
(in whole or in part) from time to time, shall be more
restrictive than the negative covenants contained in
the Credit Agreement, the Credit Agreement shall
automatically be deemed to have been amended to add
such more restrictive covenants.
Events of Default: Substantially similar to those contained in the
Existing Credit Agreement.
Conditions Precedent to Substantially similar to the Existing Credit
Initial Funding of Term Agreement, together with the following additional
Loan: conditions (the date on which such conditions are
satisfied, the "Closing Date"):
1. Satisfactory Documentation. The Credit Agreement
and related loan documents shall be prepared by
counsel to the Administrative Agent and shall be
consistent with the terms hereof and of the
Commitment Letter.
2. Tender Offer. Concurrently with the initial
borrowing under the Term Loan, the Borrower shall
acquire, pursuant to a tender offer (the "Tender
Offer"), at least a majority of the outstanding
common stock of the Target.
3. No Material Adverse Change. (a) Since September 30,
1999, there shall not have been any material adverse
change in the condition or operations of the Buyer
and its subsidiaries, considered as a whole (on a
pro forma basis assuming consummation of the
Acquisition), and (b) no information submitted to
the Arranger or
5
<PAGE>
the Administrative Agent shall prove, when
considered as a whole with all such information so
submitted, to have been inaccurate, incomplete or
misleading in any material respect.
4. Certain Financial Statements. The Administrative
Agent shall have received a pro forma balance sheet
for the Borrower and its subsidiaries and the Target
and its subsidiaries giving effect to the
Acquisition as of the quarterly date immediately
preceding the Closing Date and pro forma income and
cash flow statements for the Borrower and its
subsidiaries and the Target and its subsidiaries for
the twelve month period ending on the quarterly date
immediately preceding the Closing Date. Such pro
forma financial statements shall reflect the
expenses and financing necessary to consummate the
Acquisition.
5. Consents and Approvals. All material necessary
governmental and third party consents and approvals
in connection with the Term Loan, the Tender Offer
and the other transactions contemplated by the Term
Loan shall have been obtained and remain in effect,
and all applicable waiting periods shall have
expired without any action being taken by any
applicable authority, except to the extent the
failure to obtain any such consent or approval
would not have a material adverse effect on the
Buyer, Target and their respective subsidiaries
considered as a whole (on a pro forma basis,
assuming consummation of the Acquisition).
6. Litigation, etc. There shall exist no action, suit,
investigation, litigation or proceeding pending or
threatened in any court or before any arbitrator or
governmental instrumentality (a) with respect to
which there is a reasonable possibility of an
adverse decision that would be reasonably likely to
have a material adverse
6
<PAGE>
effect on the condition or operations of the
Borrower, the Target, and their respective
subsidiaries, considered as a whole (on a pro forma
basis, assuming consummation of the Acquisition) or
(b) that purports to affect the validity or binding
effect of the Term Loan.
7. Payments of Amounts Due. All fees and other
compensation contemplated hereby payable to the
Arranger, the Administrative Agent or the Lenders
shall have been paid to the extent due.
8. Customary Closing Documents. All documents required
to be delivered under the definitive financing
documents, (including customary legal opinions),
corporate records and documents from public
officials and officers' certificates, shall have
been delivered to the reasonable satisfaction of
the Administrative Agent.
Conditions Precedent to Consummation of the Merger (with the aggregate cash
Second Funding of Term consideration paid for the overall Acquisition not
Loan: exceeding $1,900,000,000), together with customary
additional conditions substantially similar to
those applicable to ongoing borrowings under the
Existing Credit Agreement, including absence of any
default and reaffirmation of representations and
warranties, except representations and warranties
relating to material adverse change and certain
other matters.
Assignments and The Lenders may assign all or, in an amount of not
Participations: less than $5 million, any part of their share of the
Term Loan to affiliates or one or more banks,
financial institutions or other entities that are
eligible assignees (to be described in the Credit
Agreement) and are acceptable to the Administrative
Agent and the Borrower, such consents not to be
unreasonably withheld, and upon such assignment, such
affiliate, bank, financial institution or entity shall
become a Lender for all purposes of the loan
documentation; provided that assignments made to
affiliates and other Lenders shall not be subject to
the $5 million minimum assignment requirement. In
connection with
7
<PAGE>
each assignment the Administrative Agent shall be paid
by the assigning Lender an assignment fee of $3,500.
The Lenders will have the right to sell
participations, subject only to customary limitations
on voting rights, in their share of the Term Loan.
Requisite Lenders: Lenders holding 51% of the Term Loan, except that with
respect to certain matters relating to the interest
rates, maturity, the definition of Requisite Lenders
and certain other matters (substantially similar to
those set forth in the Existing Credit Agreement),
Requisite Lenders will be defined as Lenders holding
100% of the Term Loan.
Indemnity: Substantially similar to the Existing Credit
Agreement.
Governing Law and The Borrower will submit to the non-exclusive
Jurisdiction: jurisdiction and venue of the federal and state courts
of the State of New York and (together with the
Arranger, the Administrative Agent and the Lenders)
shall waive any right to trial by jury. New York law
shall govern the Credit Agreement and related loan
documents.
8
EXHIBIT (c)(1)
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated June 11, 1986 (the "Agreement"), between
DELTA AIR LINES, INC., a Delaware corporation (the "Purchaser"), and COMAIR,
INC., an Ohio corporation (the "Company").
WHEREAS, the Purchaser and the Company are parties to a joint marketing
arrangement known as the "Delta Connection," which has been and continues to be
mutually beneficial to the Purchaser and the Company;
WHEREAS, the Purchaser and the Company deem it desirable and in their
respective best interests that the Purchaser acquire a significant equity
interest in the Company; and
WHEREAS, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, 1,850,000 shares (the "Shares")
of the Company's authorized but unissued common stock, no par value (the
"Common Stock"), at the price and on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto agree as follows:
I. SALE AND PURCHASE OF THE SHARES
1.1 Shares to Be Sold. Subject to the terms and conditions of this
Agreement, at the closing provided for in Section 1.3 hereof (the "Closing"),
the Company will issue, sell and
<PAGE>
2
deliver to the Purchaser, and the Purchaser will purchase from the Company, the
Shares for a purchase price of $9.125 per share.
1.2 Consideration. Subject to the terms and conditions of this Agreement,
in reliance on the representations, warranties and agreements of the Company
contained herein and in full payment for the Shares, at the Closing the
Purchaser will deliver to the Company, in immediately available funds by wire
transfer into an account designated by the Company at least one day in advance
of the Closing, the sum of $16,881,250. At the Closing, the Company will
deliver to the Purchaser certificates representing the Shares, duly executed by
the Company and registered in the name of the Purchaser or its designee, such
shares to bear the legend provided for in Section 8.5 hereof.
1.3 Closing. The Closing of the purchase and sale of the Shares
contemplated by this Agreement shall take place at the offices of the Purchaser
at 10:00 A.M., local time, on the next business day following the satisfaction
(or, if permitted, waiver) of the conditions set forth in Article V hereof or
at such other time and place as the parties shall mutually agree.
II. REPRESENTATION AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
2.1 Organization and Qualification. The Company is a duly incorporated and
validly existing corporation in good standing under the laws of the State of
Ohio and has the requisite power and authority (corporate and otherwise) to
own, operate and lease the properties it now
<PAGE>
3
owns, operates and leases and to conduct its business as it is now being
conducted. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each of the jurisdictions in which the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where failure to be so
qualified would not, either individually or in the aggregate, have a material
adverse effect on the business, financial condition or results of operations of
the Company. The Company has previously delivered to the Purchaser accurate and
complete copies of its Articles of Incorporation and Regulations as in effect
on the date hereof.
2.2 Authority Relative to this Agreement. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of the Company and no other
corporate proceedings on the part of the Company are necessary to authorized
this Agreement and the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and (assuming that
this Agreement is a valid and binding agreement of the Purchaser) constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
2.3 Capitalization. The authorized capital stock of the Company consists
of 10,000,000 shares of Common Stock and 100,000 shares of preferred stock, no
par value (the "Preferred Stock"), of the Company. As of the date of this
Agreement, 7,709,425 shares of
<PAGE>
4
Common Stock are issued and outstanding, no shares of Common Stock are held in
the Company's treasury, and no shares of the Preferred Stock are outstanding.
In addition, as of the date of this Agreement, 130,044 shares of Common Stock
are reserved for issuance upon the exercise of outstanding stock options
granted under the Company's Employees Stock Option Plan -- 1981. All of the
issued and outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable and are not subject to, nor were they
issued in violation of, any preemptive rights. Except as set forth above, there
are no outstanding options, warrants or other rights, agreements or commitments
of any kind obligating the Company to issue any additional shares of its
capital stock.
2.4 Validity of the Shares; Etc. The Shares have been duly authorized for
issuance and, when issued and paid for in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable. The Purchaser
will acquire good and valid title to the Shares, free of all claims, liens,
options, charges, encumbrances and restrictions of any kind whatsoever, except
as provided herein and restrictions on their transferability under the
Securities Act of 1933, as amended (the "Securities Act").
2.5 SEC Reports and Financial Statements. The Company has previously
delivered to the Purchaser true and complete copies of its (i) Annual Reports
on Form 10-K for the years ended March 31, 1984 and March 31, 1985, as filed
with the Securities and Exchange Commission (the "SEC"); (ii) Quarterly Reports
on Form 10-Q for the three months ended June 30, 1985, for the six months ended
September 30, 1985 and for the nine months ended December
<PAGE>
5
31, 1985, as filed with the SEC; (iii) proxy statements relating to all
meetings of its shareholders (whether annual or special) held or scheduled to
be held since April 1, 1983; and (iv) all other reports, statements and
registration statements (including Current Reports on Form 8-K) filed by it
with the SEC since April 1, 1983 (collectively, the "SEC Filings"). As of their
respective dates, the SEC Filings did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Filings were prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as
otherwise indicated in such financial statements or the notes thereto) and
present fairly the financial condition, results of operations and changes in
financial position of the Company as at the dates or for the periods indicated
therein.
2.6 Absence of Certain Changes or Events. Except as set forth in the SEC
Filings, since December 31, 1985, the Company has conducted its business only
in the ordinary and usual course and there has not been any event, change, or
development which has affected or may affect materially and adversely the
business, financial condition or results of operations of the Company.
2.7 No Violation. Neither the execution and delivery of this Agreement by
the Company, nor the consummation of the transactions contemplated hereby, will
(i) violate, conflict with or result in a breach or any of the provisions of
the Articles of Incorporation or
<PAGE>
6
Regulations of the Company or any note, bond, mortgage, indenture, deed of
trust or other material agreement to which the Company is a party or to which
the Company or any of its properties or assets may be subject or bound or (ii)
violate any judgment, ruling, order, writ, injunction, decree, statute,
ordinance, law, rule or regulation applicable to the Company or any of its
properties or assets; except in each case, for such violations, conflicts or
breaches which, either individually or in the aggregate, would not have any
material adverse effect on the business, financial condition or results of
operations of the Company.
2.8 Governmental Approvals. No notice to, filing or registration with, or
permit, authorization, consent or approval of, any governmental or regulatory
agency or authority is necessary or required in connection with the execution
and delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except for (i) filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act"), (ii) filings with the Securities and Exchange Commission, and (iii)
other filings, registrations, permits, authorizations, consents or approvals
relating to matters which, either individually or in the aggregate, are not
material to the business, financial condition or results of operations of the
Company.
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company as follows:
3.1 Authority Relative to this Agreement. The Purchaser has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions
<PAGE>
7
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of the Purchaser and no other corporate proceedings
on the part of the Purchaser are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement had been duly and validly
executed and delivered by the Purchaser and (assuming that this Agreement is a
valid and binding agreement of the Company) constitutes a valid and binding
agreement of the Purchaser, enforceable against the Purchaser in accordance
with its terms.
3.2 Investment Intent. The Purchaser understands that the Shares and any
other voting securities issued pursuant to this Agreement will not be
registered under the Securities Act of 1933 and may not be sold or transferred
for value without a registration or pursuant to an exemption from registration
under that Act. Sales made under Securities and Exchange Commission Rule 144
may be made only under the applicable volume and other limitations of that
Rule. Furthermore, Purchaser understands that the Company has no plans or
obligations to register such Shares or other voting securities except as set
forth in this Agreement.
IV. COVENANTS
4.1 The Company's Board of Directors. The Company agrees that, if the
Purchaser shall so request, (i) as promptly as practicable after the Closing,
it will take such action as may be necessary to cause the election to the
Company's Board of Directors of one designee selected by the Purchaser and
reasonably acceptable to the Company and (ii) for as long as the Purchaser owns
at least 10% of the outstanding Common Stock, the Company will include at least
one
<PAGE>
8
designee of the Purchaser reasonably acceptable to the Company on the slate of
nominees for election as directors nominated by the Company's Board of
Directors and will use its reasonable best efforts to assure that such
individual is elected to the Company's Board of Directors (including, without
limitation, by soliciting proxies in favor of such election).
4.2 Equity Accounting. The Company will furnish to the Purchaser all
information that is required by generally accepted accounting principles to
enable the Purchaser to account for its investment in the Company pursuant to
the equity method if the Purchaser elects or is required by generally accepted
accounting principles to do so. To the extent reasonably requested by the
Purchaser, the Company will, and will cause its employees, independent public
accountants and other representatives to, provide information regarding the
Company to, and otherwise cooperate with, the Purchaser so as to enable the
Purchaser to prepare financial statements in accordance with generally accepted
accounting principles and to comply with its reporting requirements and other
disclosure obligations under applicable Federal securities laws and
regulations.
4.3 Registration Rights.
(a) Demand Rights. If, at any time following the Closing, the Purchaser
shall desire to sell any or all of the Shares or any voting securities acquired
by the Purchaser pursuant to Section 4.4 hereof (for purposes of this Section
4.3 "Shares" shall include such voting securities), under circumstances
requiring registration under the Securities Act, and shall so advise the
Company by written notice (which notice shall specify the number of Shares
proposed
<PAGE>
9
to be sold, describe the method of proposed sale and contain an undertaking by
the Purchaser to provide all such information and to take all such action as
may be required in order to permit the Company to comply with all applicable
requirements of the SEC and to obtain acceleration of the effective date of
such registration statement), the Company shall promptly prepare and file a
registration statement with the SEC relating to such Shares and use its
reasonable best efforts to cause such registration statement to become
effective and remain effective for a period of not less than six months (or
such lesser period as the parties may agree); provided, however, that the
Company shall not be obligated to effect more than two such registrations. If
the plan of distribution specified by the Purchaser with respect to any such
registration involves the selection of a managing underwriter or underwriters,
such managing underwriter or underwriters shall be chosen by the Purchaser,
subject to the approval of the Company, which approval shall not be
unreasonably withheld. In connection with any such registration, the Company
will make such filings, and will use its reasonable best efforts to cause such
filings to become effective, so that the Shares proposed to be sold shall be
registered or qualified for sale under the securities or Blue Sky laws of such
jurisdictions as shall be reasonably appropriate for the distribution of the
Shares covered by the registration statement; provided, however, that the
Company shall not be required to register as a broker or dealer in any
jurisdiction where it is not then so registered or to qualify to do business as
a foreign corporation in any jurisdiction where it is not then so qualified or
to file any general consent to service of process.
<PAGE>
10
(b) Piggyback Rights. If, at any time following the Closing, the Company
shall propose the registration under the Securities Act of an underwritten
offering of shares of capital stock, the Company shall give written notice to
the Purchaser of such proposed registration and will use its reasonable best
efforts to include in such registration such number of Shares as the Purchaser
shall request in writing within 15 days after the receipt of the Company's
notice and to cause such Shares to be offered to the public on the same terms
(including the method of distribution and, in the case of shares of the same
class of stock, the offering price) applicable to the other shares of capital
stock to be included in such offering; provided, however, that if the managing
underwriter or underwriters of such offering shall determine in good faith and
so advise the Company in writing that the number of shares of capital stock
proposed to be sold in such offering (including the Shares proposed to be sold
by the Purchaser) exceeds the number which can be sold in such offering, the
Company shall be required to include in such offering only such number of
Shares, which, when added to the number of shares of capital stock proposed to
be sold by the Company in such offering, can, in the good faith judgment of the
managing underwriter or underwriters, be sold without adversely affecting the
success of the offering (in being understood, however, that if other holders of
capital stock of the Company shall have requested the inclusion of their shares
in such registration, the number of Shares held by the Purchaser and the number
of shares of capital stock of the Company held by such other holders to be
included in such offering shall be determined on a pro-rata basis).
<PAGE>
11
(c) Expenses. The Company shall pay all fees and expenses in connection
with any registration effected pursuant to this Section 4.3, except for
underwriting discounts and commissions to brokers or dealers attributable to
the Shares being sold by the Purchaser and the fees and disbursements of any
counsel and accountants retained by the Purchaser in connection with such
registration.
(d) Indemnification. In the case of any registration effected pursuant to
this Section 4.3, the Company and the Purchaser will each provide the other and
any underwriter retained in connection therewith with customary indemnities.
4.4. Preemptive Rights
(a) If at any time after the issuance and sale of the Shares and for so
long as the Purchaser owns at least 10% of the outstanding Common Stock, the
Company proposes to issue any additional voting securities (excluding, however,
up to 472,500 shares of Common Stock issuable pursuant to the Comair, Inc.
Employees Stock Option Plan - 1981), the Company shall promptly advise the
Purchaser in writing of the terms on which such voting securities are to be
issued. The Purchaser shall have the right, which may be exercised at any time
within 15 days following receipt of such notice, to acquire on the same terms
and conditions as such proposed issuance (or, in the case of the issuance of
any voting securities for consideration other than cash, at a cash price equal
to the fair market value of such non-cash consideration on the date that the
Company first agrees to issue such voting securities) the number of similar
voting securities set forth hereinafter. The number of voting securities
covered by each such right of the Purchaser
<PAGE>
12
shall be that number which, when added to all voting securities then owned by
the Purchaser, would provide the Purchaser with the number of votes equal to
the Purchaser's Current Percent of the total number of votes represented by all
outstanding voting securities, after giving effect to the issuance of the
voting securities giving rise to the operation of this Section 4.4 and the
voting securities issuable to the Purchaser pursuant to this Section 4.4.
(b) Notwithstanding the foregoing, the Company need not notify the
Purchaser of the issuance of voting securities which in the aggregate represent
less than 1% of the total number of votes represented by all then outstanding
voting securities, but shall notify the Purchaser within 15 days after the end
of each fiscal quarter of the Company (or more frequently if requested by the
Purchaser) as to the number of voting securities so issued during such quarter.
The Purchaser's right to purchase additional voting securities under this
Section 4.4 by reason of the issuance of such voting securities may, at the
election of the Purchaser, be exercised at any time within 30 days following
receipt of such notice or shall cumulate and may be carried forward and
exercised by the Purchaser at the time of and together with the subsequent
purchase of additional voting securities by the Purchaser pursuant to the next
notice received by the Purchaser under Section 4.4(a).
(c) For purposes of this Section 4.4, (i) the term "voting securities"
shall mean any securities of the Company entitled to vote generally in the
election of directors; (ii) the term "Purchaser's Current Percent" shall mean
that percentage derived by dividing the total number of votes represented by
all voting securities then held by the Purchaser by the total number of votes
<PAGE>
13
represented by all of the Company's outstanding voting securities immediately
prior to the issuance of voting securities giving rise to the operation of this
Section 4.4; and (iii) the term "fair market value" of any non-cash
consideration on the date in question shall mean the fair market value of such
consideration as mutually agreed by the Company and the Purchaser, or if such
parties are unable to agree, as determined by an investment banking firm
mutually agreeable to both parties. In the event that the parties are unable to
agree on an investment banking firm, then each party shall name its own
investment banking firm and such firms shall select a third investment banking
firm to determine the "fair market value" of any non-cash consideration. The
fees and expenses of such third investment firm shall be borne equally by the
Company and the Purchaser.
(d) If and when Purchaser exercises any purchase rights under this Section
4.4, the purchase shall be closed within 20 days of the date of the notice of
such exercise.
4.5 Right of First Refusal. If at a time when the Purchaser owns at least
5% of the outstanding Common Stock, the Purchaser proposes to sell any voting
securities (as defined in Section 4.4(c)) then owned by it either (i) to five
or fewer persons pursuant to a registration statement prepared as a result of
Purchaser's exercise of its demand rights under Section 4.3(a), or (ii) in a
private sale without registration under the Securities Act, the Purchaser shall
promptly advise the Company in writing of the price and terms on which such
voting securities are to be sold and, if known, the intended purchaser of such
voting securities. The Company or its designee shall have the right, which may
be exercised at any time within 15 days following
<PAGE>
14
receipt of such notice, to purchase all, but not less than all, of the voting
securities proposed to be sold at the same price and on the same terms as such
proposed sale; provided, however, that if such price is payable in whole or in
part in consideration other than cash, the price payable by the Company shall
be payable in cash and shall be equal to the fair market value of such non-cash
consideration on the date the Purchaser first agrees to sell such voting
securities, determined as provided in Section 4.4(c). If and when the Company
exercises any purchase rights under this Section 4.5, the purchase shall be
closed within 20 days of the date of the notice of such exercise. If the
Company does not exercise its right to purchase the voting securities proposed
to be sold, the Purchaser shall be free to sell such voting securities at the
same price and on the same terms contained in the Purchaser's written notice to
the Company within the one hundred twenty (120) day period following the
expiration of the Company's fifteen (15) day exercise period.
4.6 Limitation on Future Purchases.
(a) The Purchaser agrees that, without the prior written consent of the
Company (specifically expressed in a resolution adopted by a majority of the
Company's Board of Directors other than the Purchaser's designee), neither it
nor any corporation or any entity controlled by it (collectively, the
"Purchaser Group"), will, directly or indirectly, acquire any shares of Common
Stock (except by way of stock dividends, stock splits or other stock
distributions made available to holders of Common Stock generally) if the
effect of such acquisition would be to increase the aggregate ownership of
shares of Common Stock then owned by all members of the Purchaser Group to
greater than 25% of all shares of Common
<PAGE>
15
Stock then outstanding; provided, however, that: (i) it shall not be a
violation of the foregoing limitation if the number of shares of Common Stock
shall have decreased (by reason of repurchases of shares or other action taken
by the Company) and the Purchaser Group shall thereby become the beneficial
owner of more than 25% of the then outstanding shares of Common Stock and (ii)
the foregoing limitation shall terminate and be of no further force and effect
if any of the following events shall occur: (A) a tender or exchange offer is
made or publicly proposed to be made by any person, entity or group (other than
the Purchaser, any other member of the Purchaser Group or any other person,
entity or group with whom the Purchaser or any other member of the Purchaser
Group has any agreement or understanding or has communicated, either directly
or indirectly, for the purposes of encouraging such offer) for shares of Common
Stock which, if successful, would result in such person, entity or group
beneficially owning more than 20% of the shares of Common Stock then
outstanding, (B) any person, entity or group shall have acquired or publicly
proposed to acquire beneficial ownership of more than 20% of the shares of
Common Stock then outstanding, (C) any person, entity or group shall have
entered into a definitive agreement or agreement in principle with the Company
with respect to the acquisition of all or substantially all of the assets of
the Company or all of the outstanding shares of Common Stock by means of a
merger, consolidation or other business combination with or involving the
Company or (D) the Company shall have failed to comply in any material respect
with its obligations under this Agreement.
<PAGE>
16
(b) For purposes of this Section 4.6, (i) the term "beneficial ownership"
shall have the meaning set forth in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act") and (ii) the term "group" shall have the
meaning set forth in Section 13(d)(3) of the Exchange Act.
(c) The Company hereby agrees that if it shall appear to the Purchaser
that shareholder approval may be required under applicable law for the
Purchaser to acquire additional voting securities as permitted under the terms
of this Agreement, and the Purchaser so requests in writing, the Company will
use its reasonable best efforts to obtain such approval as expeditiously as
possible; such efforts shall include but shall not be limited to the calling of
a special meeting of shareholders and soliciting proxies from shareholders in
favor of such proposed acquisition; provided, however, that such action shall
not be required if the Company shall provide to the Purchaser an opinion of
counsel satisfactory to the Purchaser to the effect that shareholder approval
of the proposed acquisition is not required under applicable law.
4.7 Covenant to Satisfy Conditions. Each of the parties hereto will use
their respective reasonable best efforts, and cooperate with the other, to
insure that the conditions set forth in Article V hereof are satisfied as
promptly as practicable.
V. CONDITIONS
5.1 Conditions to Each Party's Obligations. The respective obligations of
the Purchaser and the Company under this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
<PAGE>
17
(a) no preliminary or permanent injunction or other order, decree or
ruling issued by any court of competent jurisdiction nor any statute, rule,
regulation or order promulgated or enacted by any governmental, regulatory or
administrative agency or authority shall be in effect which would prevent the
consummation of the transactions contemplated hereby; and
(b) all applicable waiting periods under the HSR Act relating to the
purchase and sale of the Shares pursuant to this Agreement shall have expired
or been terminated.
5.2 Conditions to Obligation of the Company. The obligations of the
Company under this Agreement are subject to the satisfaction, at or prior to
the Closing, of each of the following additional conditions:
(a) the Purchaser shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
so performed and complied with by it at or prior to the Closing;
(b) the representations and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing as if made at and as of such date; and
(c) no action, suit, claim, investigation or proceeding before any court,
governmental agency, commission, or administrative or regulatory authority,
domestic or foreign, shall have been commenced and be pending which seeks to
restrain, prevent or delay or to change the transactions contemplated hereby or
which otherwise questions the validity or
<PAGE>
18
legality of any such transactions; provided, however, that in the case of any
action, suit, claim or proceeding brought by a person other than a governmental
or regulatory authority, the condition set forth in this Section 5.2(c) shall
be deemed to have been satisfied if the Company shall have received an opinion
of counsel, reasonably satisfactory to the Company, to the effect that it is
more likely than not that the relief sought therein will not be granted.
5.3 Conditions to Obligations of the Purchaser. The obligations of the
Purchaser under this Agreement are subject to the satisfaction, at or prior to
the Closing, of each of the following additional conditions:
(a) the Company shall have performed or complied in all material respects
with all obligations and agreements required by this Agreement to be so
performed or complied with by it at or prior to the Closing;
(b) the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing as if made at and as of such date; and
(c) no action, suit, claim, investigation or proceeding before any court,
governmental agency, commission, or administrative or regulatory authority,
domestic or foreign, shall have been commenced and be pending which seeks to
restrain, prevent or delay or to change the transactions contemplated hereby or
which otherwise questions the validity or legality of any such transactions;
provided, however, that in the case of any action, suit, claim or proceeding
brought by a person other than a governmental or regulatory authority, the
condition
<PAGE>
19
set forth in this Section 5.3(c) shall be deemed to have been satisfied if the
Purchaser shall have received an opinion of counsel, reasonably satisfactory to
the Purchaser, to the effect that it is more likely than not that the relief
sought therein will not be granted.
VI. TERMINATION
6.1 Termination. This Agreement may be terminated and the purchase and
sale of the Shares contemplated hereby may be abandoned at any time prior to
the Closing:
(a) by mutual consent of the Purchaser and the Company;
(b) by the Purchaser, on or after six months from the date of this
Agreement, if any of the conditions to its obligations hereunder have not been
met or waived by the Purchaser prior to such date;
(c) by the Company, on or after six months from the date of this
Agreement, if any of the conditions to its obligations hereunder have not been
met or waived by the Company prior to such date; or
(d) by the Purchaser if, after the date of this Agreement, there shall
have occurred any event, change, or development which has affected or may
affect materially and adversely the business, financial condition or results of
operations of the Company.
6.2 Effect of Termination. In the event of the termination of this
Agreement by either the Purchaser or the Company as provided above, this
Agreement shall thereafter become void and there shall be no liability on the
part of either party hereto or their respective directors, officers
stockholders or agents, except that any such termination shall be without
prejudice to the
<PAGE>
20
rights of either party hereto arising out of the willful breach by the other
party of any covenant or agreement contained in this Agreement.
VII. MISCELLANEOUS
7.1 Brokers. The Company and the Purchaser each represent and warrant to
the other that neither has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby, except that Purchaser has retained
Dean Witter Reynolds, Inc., as its financial advisor and the Company has
retained PaineWebber Incorporated as its financial advisor. The Purchaser and
the Company each agree to indemnify and hold each other harmless from and
against any and all claims, liabilities or obligations with respect to any such
fees or commissions asserted by any person on the basis of any act or statement
alleged to have been made by such party.
7.2 Expenses. Each party shall pay its own expenses incurred in connection
with this Agreement and the obligations contemplated hereby.
7.3 Survival of Representations. All representations, warranties and
agreements made by the Company and the Purchaser in this Agreement shall
survive the Closing hereunder and any investigation at any time made by or on
behalf of any party hereto.
7.4 Adjustments. In the event of any change in the Common Stock by reason
of stock dividend, split-up, recapitalization, combination, exchange of shares
or the like, the number and kind of shares subject to this Agreement and the
price per Share to be paid hereunder shall be appropriately adjusted.
<PAGE>
21
7.5 Legend. The certificates representing the Shares and the Option Shares
to be issued and delivered to the Purchaser pursuant to this Agreement shall
bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED FOR SALE, SOLD
OR TRANSFERRED EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT OR (ii) AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT, AND IN
COMPLIANCE WITH THE APPLICABLE LAWS OF ANY STATE OR OTHER JURISDICTION. THE
SALE, TRANSFER OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS ALSO SUBJECT TO RESTRICTIONS CONTAINED IN A STOCK PURCHASE
AGREEMENT DATED ___________________, 1986, BETWEEN DELTA AIR LINES, INC. AND
THE COMPANY, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE SECRETARY OF THE
COMPANY AND WILL BE MAILED TO ANY SHAREHOLDER WITHOUT CHARGE WITHIN 5 DAYS
AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
7.6 Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings with
respect to the subject matter hereof other than those
<PAGE>
22
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
7.7 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
7.8 Amendment, Waiver. This Agreement may be amended only by a written
instrument duly executed by both the parties hereto. To the extent permitted by
law, any condition to a party's obligations hereunder may be waived in writing
by such party.
7.9 Parties in Interest. This Agreement will be binding upon, inure to the
benefit of and be enforceable by the Company and the Purchaser and their
respective successors and assigns. This Agreement may not be assigned by the
parties hereto, except that the Purchaser may assign its rights hereunder to
any directly or indirectly wholly owned subsidiary of Purchaser; provided,
however, that no such assignment shall relieve the Purchaser of any of its
obligations hereunder.
7.10 Specific Performance. The Company acknowledges and agrees that the
Purchaser would not have an adequate remedy at law and would be irreparably
harmed in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the Purchaser shall be entitled to injunctive
relief to prevent breaches of this Agreement and to specifically enforce the
terms and provisions hereof, in addition to any other remedy to which it may be
entitled, at law or in equity.
<PAGE>
23
7.11 Notices. All notices, claims, certificates, requests, demands and
other communications hereunder ("notices") will be given in writing and will be
deemed to have been duly given if delivered or mailed (registered or certified
mail, postage prepaid, return receipt requested) as follows:
(a) If to the Purchaser, to:
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
Attention: Chief Executive Officer
Copy to:
Senior Vice President-General Counsel & Secretary
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
(b) If to the Company:
Comair, Inc.
Greater Cincinnati Airport
P.O. Box 75021
Cincinnati, Ohio 45275
Attention: Chief Executive Officer
Copy to:
Keating, Muething & Klekamp
18th Floor, Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Richard D. Siegel, Esq.
<PAGE>
24
or, in either case, such other address as the person to whom notice is to be
given may have previously furnished to the others in the manner set forth
above.
7.12 Governing Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of Delaware, without regard to
the principles of conflicts of law.
7.13 Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same instrument.
<PAGE>
25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
DELTA AIR LINES, INC.
By
-----------------------------------
Title
------------------------------
COMAIR, INC.
By
-----------------------------------
Title
------------------------------
<PAGE>
"Delta Connection" Program
to be Enhanced.
DELTA AIR LINES TO ACQUIRE
SIGNIFICANT EQUITY INTEREST
IN CINCINNATI-BASED COMAIR, INC.
ATLANTA, GA, May 29, 1986 -- Delta Air Lines, Inc. and Comair, Inc., a
Cincinnati-based regional airline, jointly announced today that the Boards of
Directors of each company have approved a purchase by Delta of approximately 20
percent of the voting securities of Comair. The purchase involves 1,850,000
newly-issued shares of Comair's common stock, at a price of $9.125 per share,
for a total consideration to Comair of $16,881,250. The purchase remains
subject to execution of a definitive purchase agreement, the normal waiting
period under the Hart-Scott-Rodino Act, and certain other customary conditions.
The transaction does not require approval by the Department of Transportation,
and is expected to be concluded by the end of next month.
Delta's Chairman of the Board and Chief Executive Officer David C.
Garrett, Jr., said, "We are making this sizeable investment in Comair to
solidify and enhance The Delta Connection program in which the two companies
have successfully engaged during the past two years. This transaction, along
with the purchase of an equity interest in Atlanta-based Atlantic Southeast
Airlines announced earlier, is further evidence of our commitment to The Delta
Connection program and is consistent with our objective of protecting and
improving out strong position in the marketplace."
Under The Delta Connection marketing program, Comair's flights in-and-out
of its Cincinnati hub are timed to provide minimum connecting times to Delta's
flights at that city, thereby providing passengers with excellent access to the
entire systems of both carriers. Comair's flights are also shown under the
Delta code designation in computer-automated reservations systems and in the
Official Airline Guide, in order to make the coordinated schedules quickly
available for travel agents and airline reservations personnel booking such
flights. Passengers utilizing these Comair connecting flights are also given
the advantage of cost-breaks inherent in through fares, and are offered a full
range of promotional fares provided by Delta. In addition, passengers traveling
on Comair's flights receive Delta Frequent Flyer credits.
David R. Mueller, President and Chief Executive Officer of Comair, said,
"We are extremely pleased with this strong commitment and vote of confidence by
Delta. The capital infusion will facilitate our continued growth and rapid
expansion. We are dedicated to protecting our respective positions of strength
as major and regional airlines in the Midwest. We have been
<PAGE>
pleased with The Delta Connection program since its inception and feel this
commitment by Delta reflects the extraordinary success both companies have
enjoyed as a result of this marketing strategy. We are confident this
transaction will prove beneficial to our employees and our shareholders as
well."
Comair will continue to operate as a wholly-separate company with its own
management and operating policies. Comair stated that it presently plans no
major change in the basic character of its operations but does plan to use the
additional capital for more rapid growth.
EXHIBIT (c)(3)
September 29, 1999
Delta Air Lines, Inc.
1030 Delta Boulevard
Hartsfield Atlanta International Airport
Atlanta, GA 30320
Attention: John Varley
Dear Sir:
In order to allow you to evaluate a possible transaction, which for
the avoidance of doubt does not include our ongoing Delta Connection
relationship or any discussions relating to the renewal or renegotiation
thereof (the "Proposed Transaction"), with Comair Holdings, Inc. (the
"Company"), we have and will deliver to you, upon your execution and delivery
to us of this letter agreement, such information about the properties and
operations of the Company that you may reasonably request for the purpose of
such evaluation (subject to any legally binding obligations of the Company to
keep such information confidential). All written information about the Company
furnished by us or our Representatives (as defined below) solely in connection
with the Proposed Transaction and regardless of the manner in which it is
furnished, is referred to in this letter agreement as "Proprietary
Information".
Proprietary Information also includes all notes, analyses,
compilations, studies, interpretations or other documents prepared by you or
your Representatives which contain, reflect or are based upon, in whole or in
part, the information furnished to you or your Representatives pursuant
hereto. Proprietary Information does not include, however, information which
(a) is or becomes generally available to the public other than as a result of
a disclosure by you or your Representatives in violation of this Agreement,
(b) was available to you on a nonconfidential basis prior to its disclosure by
us or our Representatives or (c) becomes available to you on a nonconfidential
basis from a person other than us or our Representatives who is not otherwise
known to you to be bound by a confidentiality agreement with us or any
Representative of ours, or is otherwise not known to you to be under an
obligation to us or any Representative of ours not to transmit the information
to you. As used in this letter agreement, the term "Representative" means, as
to any person, its directors, officers, employees, agents, advisors
(including, without limitation, financial advisors), counsel, accountants and
financing sources (including their advisors and agents). As used in this
letter agreement, the term "person" shall be broadly interpreted to include,
without limitation, any corporation, company, trust, partnership, other entity
or individual.
<PAGE>
2
Subject to the immediately succeeding paragraph, unless otherwise
agreed to in writing by us, you agree (a) except as required by law, to keep
all Proprietary Information confidential and not to disclose or reveal any
Proprietary Information to any person other than your Representatives who are
actively and directly participating in your evaluation of the Proposed
Transaction or who otherwise need to know the Proprietary Information for the
purpose of evaluating the Proposed Transaction and to cause those persons to
observe the terms of this letter agreement, (b) not to use Proprietary
Information for any purpose other than in connection with your evaluation of
the Proposed Transaction or in connection with the consummation of the
Proposed Transaction in a manner that we have agreed and (c) not to disclose
to any person (other than those of your Representatives who are actively and
directly participating in your evaluation of the Proposed Transaction or who
otherwise need to know for the purpose of evaluating the Proposed Transaction
and, in the case of your Representatives, whom you will cause to observe the
terms of this letter agreement) any information about the Proposed
Transaction, or the terms or conditions or any other facts relating thereto,
including, without limitation, the fact that discussions are taking place with
respect thereto or the status thereof, or the fact that Proprietary
Information has been made available to you or your Representatives. You will
be responsible for any breach of the terms of this letter agreement by you or
your Representatives.
In the event that you or any of your Representatives are requested
pursuant to, or required by, applicable law or regulation (including, without
limitation, any rule, regulation or policy statement of any organized
securities exchange, market or automated quotation system on which any of your
securities are listed or quoted) or by legal process to make any disclosure
prohibited by the terms of the preceding paragraph, you agree that you will
provide us with prompt notice of such request or requirement in order to
enable us to seek an appropriate protective order or other remedy, to consult
with you with respect to our taking steps to resist or narrow the scope of
such request or legal process, or to waive compliance, in whole or in part,
with the terms of this letter agreement. In the event that such protective
order or other remedy is not obtained, or we waive compliance, in whole or in
part, with the terms of this letter agreement, you or your Representative will
use reasonable efforts to disclose only that portion of the Proprietary
Information which is legally required, in the reasonable opinion of your
counsel, to be disclosed and to ensure that all Proprietary Information that
is so disclosed will be accorded confidential treatment. No waiver by the
Company of the terms of this letter agreement will be effective unless it is
contained in a written instrument executed by an authorized officer of the
Company.
In consideration of our furnishing the Proprietary Information as
provided for in the first paragraph to you, you also agree that for a period
(the "Restricted Period") from the date
<PAGE>
3
of this letter agreement until the first anniversary of the date of this
letter agreement, neither you nor any corporation or any entity controlled by
you (collectively, the "Purchaser Group") will, without the prior written
consent of the Company or its Board of Directors:
(a) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or
direct or indirect rights to acquire any voting securities of
the Company or any current or former subsidiary thereof, or any
subsidiary or any substantial portion of the assets of the
Company (except by way of dividends, stock splits or other
distributions made available to holders of the Company's voting
securities generally) if, in the case of an acquisition of
common stock, the effect of such acquisition would be to
increase the aggregate ownership of the shares of the Company's
common stock then owned by all members of the Purchaser Group
to greater than 25% of all shares of common stock then
outstanding; provided, however, that it shall not be a
violation of the foregoing limitation if the number of shares
of common stock shall have decreased (by reason of repurchases
of shares or other action taken by the Company) and the
Purchaser Group shall thereby become the beneficial owner of
more than 25% of the then outstanding shares of common stock;
(b) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" to vote (as such terms are used
in the rules of the Securities and Exchange Commission), or
seek to advise or influence any person or entity with respect
to the voting of any voting securities of the Company or any
current or former subsidiary;
(c) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any
extraordinary transaction involving the Company or any current
or former subsidiary or any of its securities (other than
securities owned by you or another member of the Purchaser
Group) or any substantial portion of its assets;
(d) form, join or in any way participate in a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in connection with any of the
foregoing; or
(e) request the Company or any current or former subsidiary or
any of our Representatives, directly or indirectly, to amend or
waive any provision of this paragraph.
The foregoing limitations set forth in clauses (a) to (e) above shall terminate
and be of no further
<PAGE>
4
force and effect if any of the following events shall occur: (A) a tender or
exchange offer is made or publicly proposed to be made by any person, entity
or group (other than you, any other member of the Purchaser Group or any other
person, entity or group with whom you or any other member of the Purchaser
Group has any agreement or understanding or has communicated, either directly
or indirectly, for the purpose of encouraging such offer) for the voting
securities of the Company which, if successful, would result in such person,
entity or group beneficially owning more than 20% of the voting securities of
the Company then outstanding, (B) any person, entity or group (other than you
or any other member of the Purchaser Group) shall have acquired or publicly
proposed to acquire beneficial ownership of more than 20% of the voting
securities of the Company or any of its current or former subsidiaries then
outstanding or (C) any person, entity or group (other than you or any other
member of the Purchaser Group) shall have entered into a definitive agreement
or agreement in principle with the Company or any of its current or former
subsidiaries with respect to the acquisition of any substantial portion of the
assets of the Company or any of its current or former subsidiaries or of the
outstanding shares of the Company's common stock by means of a merger,
consolidation or other business combination involving the Company.
You acknowledge that all Proprietary Information disclosed to you is,
and shall remain, the property of the Company. If you determine that you do
not wish to proceed with the Proposed Transaction, you will promptly advise us
of that decision. In that case, or in the event that we, in our sole
discretion, so request whether because we determine not to proceed for any
reason or otherwise or the Proposed Transaction is not consummated by you, you
will, upon our written request, promptly deliver to us all Proprietary
Information furnished by us or our Representatives, and, at your election,
return or destroy (provided that any such destruction shall be certified by a
duly authorized Representative of yours) all copies, reproductions, summaries,
analyses or extracts thereof or based thereon in your possession or in the
possession of any Representative of yours.
Subject to the terms and conditions of a final agreement regarding
the Proposed Transaction and without prejudice thereto, you acknowledge that
none of the Company or our other Representatives and none of the respective
officers, directors, employees, agents or controlling persons of any such
Representatives makes any express or implied representation or warranty as to
the completeness of the Proprietary Information. You also agree that you are
not entitled to rely on the completeness of any Proprietary Information and
that you shall be entitled to rely solely on such representations and
warranties regarding the completeness of the Proprietary Information, if any,
as may be made to you in any final agreement relating to the Proposed
Transaction, subject to the terms and conditions of such agreement.
You agree that, without our prior written consent, you will not for a
period of eighteen months from the date hereof directly or indirectly solicit
for employment any executive
<PAGE>
5
officer of the Company or any of its subsidiaries or any vice president of the
Company or any of its subsidiaries who is in charge of a principal business
unit, division or function; provided that a general solicitation not
specifically directed at such employees shall not be considered a violation of
such prohibition.
Each party hereto agrees that until a final agreement regarding the
Proposed Transaction has been executed by the parties hereto, each party
hereto is not under any legal obligation and shall have no liability to the
other party of any nature whatsoever with respect to the Proposed Transaction
by virtue of this letter agreement or otherwise (other than with respect to
the confidentiality and other matters set forth herein).
Without prejudice to the rights and remedies otherwise available to
us, you agree that the Company shall be entitled to equitable relief by way of
injunction or otherwise if you or any of your Representatives breach or
threaten to breach any of the provisions of this letter agreement.
It is further understood and agreed that no failure or delay by us in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any right, power or privilege
hereunder.
This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Unless otherwise expressly stated herein with respect to any
particular obligation, your obligations under this letter agreement will
expire two years from the date hereof.
Any assignment of this letter agreement by you without our prior
written consent shall be void and of no legal force or effect.
This letter agreement contains the entire agreement between you and
us concerning confidentiality of the Proprietary Information and the contents
of this letter agreement, and no modification of this letter agreement or
waiver of the terms and conditions hereof shall be binding upon you or us,
unless approved in writing by each of you and us.
<PAGE>
6
Please confirm your agreement with the foregoing by signing
and returning to the undersigned the duplicate copy of this letter enclosed
herewith.
COMAIR HOLDINGS, INC.
By: /s/ Randy Rademacher
------------------------------------
Name: Randy Rademacher
Title: Senior Vice President-Finance
Accepted and Agreed as of the date first written above:
DELTA AIR LINES, INC.
By: /s/ Edward H. West
-----------------------------------
Name: Edward H. West
Title: Executive Vice President
and Chief Financial Officer
EXHIBIT (g)(1)
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
- -------------------------------------------------------------x
LARRY BYRNES and JOE BECHTOLD, on :
behalf of themselves and all others similarly :
situated, :
:
:
Plaintiffs, :
:
:
:
- vs.- : COMPLAINT
: CLASS ACTION
: ------------
:
:
:
:
ROBERT H. CASTELLINI, PETER H. :
FORSTER, JOHN A. HAAS, DAVID R. :
MUELLER, RAYMOND A. MUELLER, :
CHRISTOPHER J. MURPHY, III, DAVID A. :
SIEBENURGEN and GERALD L. WOLKEN, :
COMAIR HOLDINGS, INC. and DELTA AIR :
LINES INC., :
:
Defendants. :
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Class Action Complaint
Plaintiffs, by and through their attorneys, allege the following upon
information and belief, except as to paragraph 1 which is alleged upon
personal knowledge.
Nature Of The Action
1. This is a stockholders' class action on behalf of the public
stockholders of Comair Holdings, Inc., ("Comair" or the "Company"), parent
company of Comair, Inc., against its directors and the controlling shareholder
of Comair in connection with the
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proposed acquisition of the publicly owned shares of Comair common stock by
its controlling shareholder, defendant Delta Airlines Inc. ("Delta"), which
Delta does not already own. The action arise out of a tender offer by a
wholly-owned subsidiary of Delta to purchase all of the outstanding shares not
owned by Delta. The offer is being made at a price of $23.50 per share (the
"Offer"). Immediately prior to the Offer, Delta beneficially owned
approximately 22% of the outstanding shares of Comair. Delta, by way of the
Offer, seeks to acquire the 78% of Comair shares it does not already own.
2. The Directors of Comair, as set forth below, by agreeing to
recommend acceptance of the Offer and by negotiating and accepting the Offer,
are in breach of their fiduciary duties to Comair's shareholders in not taking
all steps necessary to obtain a fair and adequate price for Comair's shares
(including an auction) and by improperly bending to the wrongful and undue
pressure brought to bear by Delta.
3. The consideration that Delta has offered to members of the class
(as defined below) in the proposed transaction is unfair and inadequate
because, among other things, the intrinsic value of Comair's common stock is
materially in excess of the amount offered, given due consideration to, among
other things, the Company's growth and anticipated operating results, net
asset value and profitability and the wrongful and undue pressure brought to
bear on the Company's Board of Directors by Delta.
The Parties
4. Plaintiffs are and have been at all relevant times the owners of
shares of the common stock of Comair.
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5. (a) Comair was incorporated in 1988 and is a Kentucky corporation
with its principal executive offices at P.O. Box 75021, Cincinnati/Northern
Kentucky International Airport, Cincinnati, OH 45275. As of March 31, 1999,
Comair operated 700 flights daily to 85 cities. Comair's service extends as
far west as Colorado, north to Minneapolis, south to Key West, FL and east to
Bangor, ME. As of May 1, 1999, the Company had 3,873 full-time and 509
part-time employees consisting of 2,271 persons in aircraft operations, 1,560
in customer service activities, 331 in its fixed base, charter and pilot
training operations and the remainder in office and sales capacities.
(b) The principal subsidiary of Comair is Comair, Inc., a Cincinnati-
based regional air carrier. Comair, Inc. accounted for 95% of the operating
revenues and expenses in fiscal 1999 and is considered to be the Company's
main line of business. Comair, Inc. derives a substantial portion of its
traffic from participating in the Delta Connection program.
(c) Comair operates as a Delta Connection carrier under a ten-year
marketing agreement with Delta effective in October of 1989. The agreement
expires in October 1999. Delta owns approximately 22% of the Company's
outstanding common stock; leases reservation equipment and terminal facilities
to Comair; and provides certain services to Comair including reservations and
passenger and aircraft handling services. Approximately 45% of Comair's
business in 1999 was provided through interlining arrangements with Delta
under the Delta Connection. Under interlining agreements, Comair generally
provides the short-haul portions of a longer multi-carrier trip.
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(d) As of October 18, 1999, Comair had 95,631,000 shares of common
stock outstanding, held by thousands of shareholders of record. Comair's
common stock is listed and traded on NASDAQ.
(e) Defendant Delta is a Delaware corporation with its principal
executive offices located at Hartfield Atlanta International Airport, 1030
Delta Boulevard, Atlanta, Georgia 30320.
(f) Immediately prior to the Offer, Delta owned 21.1 million shares
of Comair common stock or approximately 22% of the outstanding shares. Delta
also has numerous interlocking business arrangements with Comair and/or
Comair, Inc. Furthermore, Delta's ability to replace Comair with another
connection carrier (which agreement expires October 1999) gives Delta a
virtual stranglehold over the business earnings and public stock price of
Comair's outstanding shares. Delta, therefore is a controlling shareholder and
owes fiduciary obligations of good faith, candor, loyalty and fair dealing to
the public shareholders of Comair.
6. (a) At all relevant times, defendant David R. Mueller ("D.
Mueller") served as Chief Executive Officer and Chairman of the Board of the
Company.
(b) At all relevant times, defendant David A. Siebenurgen
("Siebenurgen") served as President and Chief Operating Officer of the
Company.
(c) At all relevant times, defendant Robert H. Castellini
("Castellini") served as a Director of the Company.
(d) At all relevant times, defendant Peter H. Forster ("Forster")
served as a Director of the Company.
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(e) At all relevant times, defendant John A. Haas ("Hass") served as
a Director of the Company.
(f) At all relevant times, defendant Raymond A. Mueller ("R.
Mueller") served as a Director of the Company.
(g) At all relevant times, defendant Christopher J. Murphy, III
("Murphy") served as a Director of the Company.
(h) At all relevant times, defendant Gerald L. Wolken ("Wolken")
served as a Director of the Company.
(i) Defendants D. Mueller, Siebenurgen, Castellini, Forster, Hass, R.
Mueller, Murphy and Wolken constitute the Board of Directors of Comair
(collectively, the "Individual Defendants"). Defendants R. Mueller and D.
Mueller are father and son.
7. Each Individual Defendant and Comair owed and owes Comair and its
public stockholders fiduciary obligations and were and are required to use
their ability to control and manage Comair in a fair, just and equitable
manner; act in furtherance of the best interests of Comair and its public
stockholders, including, but not limited to, obtaining a fair and adequate
price for Comair's shares; refrain from abusing their positions of control;
and not to favor their own interests at the expense of its public
stockholders.
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CLASS ACTION ALLEGATIONS
8. Plaintiffs bring this action on behalf of themselves and as a
class action, pursuant to CPLR section901, on behalf of all public stockholders
of Comair, and their successors in interest, who are or will be threatened with
injury arising from defendants' actions as more fully described herein (the
"Class"). Excluded from the Class are defendants herein and any person, firm,
trust, corporation or other entity related to or affiliated with any of the
defendants.
9. This action is properly maintainable as a class action because:
(a) The Class is so numerous that joinder of all members is
impracticable.
There are approximately 95.6 million shares of Comair common stock outstanding
held by hundreds, if not thousands, of record and beneficial stockholders.
(b) There are questions of law and fact which are common to the Class
and which predominate over questions affecting any individual Class member.
The common questions include, inter alia, the following:
(i) whether defendants have engaged in and are continuing to
engage in conduct which unfairly benefits Delta at the expense of the members
of the Class;
(ii) whether the Individual Defendants, as officers and/or
directors of the Company, are violating their fiduciary duties to plaintiffs
and the other members of the Class;
(iii) whether plaintiffs and the other members of the Class
would be irreparably damaged were defendants not enjoined from the conduct
described herein;
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(iv) whether defendants have initiated and timed their
buy-out of Comair public shares at a point when the Delta Connection agreement
is up or renewal in order to unfairly benefit Delta at the expense of Comair's
public shareholders; and
(v) whether the Individual Defendants have and are in breach
of their fiduciary duties of full faith and candor to Comair's shareholders.
(c) The claims of plaintiffs are typical of the claims of the other
members of the Class in that all members of the Class will be damaged alike
from defendants' actions.
(d) Plaintiffs are committed to the prosecution of this action and
has retained competent counsel experienced in litigation of this nature.
Accordingly, plaintiffs are adequate representatives of the Class and will
fairly and adequately protect the interests of the Class.
SUBSTANTIVE ALLEGATIONS
10. According to the Form 10-K filed on or about June 18, 1999 by the
Company:
Fiscal 1999 was highlighted by record operating revenues,
operating income, net income, and passenger enplanements.
Operating revenues for the year increased to $763 million,
up 17% from $651 million in fiscal 1998. Operating income
for the year rose 26% to $204 million from $162 million. Net
income increased 30% to $132.9 million from $102.2 million
and net income per diluted share increased to $1.33 from
$1.01.
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11. On June 13, 1999, The Cincinnati Enquirer quoted Jim Parker,
airline analyst and managing director of equity analysis at SunTrust Equitable
in Atlanta, as saying, "Delta benefits from the revenue that Comair brings to
Delta" in that Comair has spent $1 billion on regional jets, has ordered
another $1 billion worth and has options for another $1 billion and that Delta
has gotten to enjoy the fruits of the investment without really actually
laying out that kind of cash.
12. On August 27, 1999, Investor's Business Daily took note of
Comair's achievements, commenting that Comair "continues to hit milestone
after milestone . . . Record results over the last few months indicate a
steady rise in passenger usage."
13. According to the Form 10-K filed on or about June 18, 1999 by
the Company:
The Company has historically benefitted from its
relationship with Delta. However, the Company's results of
operations and financial conditions could be adversely
impacted by Delta's decisions regarding routes and other
operational matters, as well as, any material interruption
or modifications in this arrangement.
14. The Delta Connection carrier ten-year marketing agreement with
Delta effective in October of 1989 expires in October 1999.
15. On October 18, 1999, Comair announced that it had reached a
definitive agreement with Delta in which Delta would acquire Comair for a
total consideration of approximately $1.91 billion or $23.50 a common share.
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16. This offering price of $23.50 is well below the Company's 52
week average of $29.
17. Under the terms of the agreement, defendant D. Mueller obtained
for himself post-merger the lucrative positions of advisor to Delta and
chairman of the Delta Connection Carrier Advisory Committee. Likewise,
defendant Siebenurgen was awarded control of the Delta Connection network.
18. Any transaction to acquire the Company at the price being
considered does not represent the true value of the Company and is unfair and
inadequate.
19. By offering a grossly inadequate price for Comair's shares and by
using its control as a means to force the consummation of the transaction,
Delta is violating its duties as a controlling shareholder.
20. Delta, by reason of its controlling ownership and its business
arrangements with Comair is in a position to ensure the effectuation of the
transaction without regard to its fairness to Comair's shareholders.
21. Any buy-out of Comair public shareholders by Delta on the terms
offered, will deny class members their right to share proportionately and
equitably in the true value of Comair's valuable and profitable business, and
further growth in profits and earnings, at a time when the Company has been
performing at record levels.
22. By reason of the foregoing, defendants have breached and will
continue to breach their duties to the public shareholders of Comair and are
engaging in improper, unfair dealing and wrongful and coercive conduct.
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23. The Directors of Comair by agreeing to recommend acceptance of
the Offer and by negotiating and accepting the Offer are in breach of their
fiduciary duties to Comair's shareholders in not taking all steps necessary to
obtain a fair and adequate price for Comair's shares (including an auction)
and by improperly bending to the wrongful and undue pressure brought to bear
by Delta.
24. Plaintiffs and the Class will suffer irreparable harm unless
defendants are enjoined from breaching their fiduciary duties and from
carrying out the aforesaid plan and scheme.
25. Plaintiffs and the other class members are immediately threatened
by the acts and transactions complained of herein, and lack an adequate remedy
at law.
WHEREFORE, plaintiffs demand judgment and preliminary and permanent
relief, including injunctive relief, in their favor and in favor of the Class
and against defendants as follows:
A. Declaring that this action is property maintainable as a class
action, and certifying plaintiffs as class representatives;
B. Enjoining the proposed transaction and, if the transaction is
consummated, rescinding the transaction;
C. Awarding plaintiffs and the Class compensatory damages and/or
rescissory damages;
D. Awarding plaintiffs the costs and disbursements of this action
including a reasonable allowance for plaintiffs' attorneys' and experts' fees;
and
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E. Granting such other, and further relief as this Court may deem to
be just and proper.
Dated: New York, New York
October 19, 1999
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By: Mark Levin
STULL STULL & BRODY
6 East 45th Street
New York, New York 10017
(212) 687-7230
Joseph H. Weiss
WEISS & YOURMAN
551 Fifth Avenue
Suite 1600
New York, New York 10176
(212) 682-3025
Attorneys for Plaintiffs
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EXHIBIT (g)(2)
No. 99C106214 JEFFERSON CIRCUIT COURT
DIVISION ________
RUSSELL BARKLEY, On Behalf of
Himself and All Others Similarly Situated PLAINTIFF
V. CLASS ACTION COMPLAINT
FOR DAMAGES AND INJUNCTIVE RELIEF;
BREACH OF FIDUCIARY DUTY
COMAIR HOLDINGS, INC.
P.O. Box 75021
Greater Cincinnati - Northern Kentucky
International Airport
Cincinnati, Ohio 45275
SERVE: Prentice Hall Corporation System
421 West Main Street
Frankfort, Kentucky 40601
and
RAYMOND A. MUELLER
P.O. Box 75021
Greater Cincinnati - Northern Kentucky
International Airport
Cincinnati, Ohio 45275
and
ROBERT H. CASTELLINI
P.O. Box 75021
Greater Cincinnati - Northern Kentucky
International Airport
Cincinnati, Ohio 45275
and
CHRISTOPHER J. MURPHY, III
P.O. Box 75021
Greater Cincinnati - Northern Kentucky
International Airport
Cincinnati, Ohio 45275
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and
PETER H. FORSTER
P.O. Box 75021
Greater Cincinnati - Northern Kentucky
International Airport
Cincinnati, Ohio 45275
and
JOHN A. HAAS
P.O. Box 75021
Greater Cincinnati - Northern Kentucky
International Airport
Cincinnati, Ohio 45275
and
GERALD L. WOLKEN
P.O. Box 75021
Greater Cincinnati - Northern Kentucky
International Airport
Cincinnati, Ohio 45275
and
DAVID R. MUELLER
P.O. Box 75021
Greater Cincinnati - Northern Kentucky
International Airport
Cincinnati, Ohio 45275
and
DAVID A. SIEBENBURGEN
P.O. Box 75021
Greater Cincinnati - Northern Kentucky
International Airport
Cincinnati, Ohio 45275
and
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DELTA AIRLINES, INC.
P.O. Box 45852
Atlanta, Georgia 30320 DEFENDANTS
SERVE: CT Corporation Systems
Kentucky Home Life Building
Louisville, Kentucky 40202
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Plaintiff, by his attorneys, alleges as follows:
SUMMARY OF THE ACTION
1. This is a stockholder class action brought by plaintiff on
behalf of the holders of Comair Holdings, Inc. ("Comair" or the "Company")
common stock against Delta Air Lines, Inc. ("Delta"), Comair and its directors
arising out of defendants' efforts to complete a merger/acquisition of Comair
at a grossly inadequate and unfair price at the expense of, and which is
unfair to, the public Comair shareholders.
2. On October 18, 1999, Comair announced that its Board of
Directors had entered into an agreement wherein Delta would acquire all
outstanding shares of Comair for $23.50 per share - via a tender offer.
3. In pursuing the unlawful plan to cash out Comair's public
stockholders for grossly inadequate consideration, each of the defendants
violated the laws of the State of Kentucky by directly breaching and/or aiding
the other defendants' breaches of their fiduciary duties of loyalty, due care,
independence and good faith and fair dealing. Plaintiff seeks to enjoin the
proposed transaction or, alternatively, rescind the transaction and/or recover
damages in the event that the transaction is consummated.
JURISDICTION AND VENUE
4. This Court has jurisdiction over Comair because Comair conducts
business in Kentucky and is a citizen of Kentucky, as it is incorporated in
Kentucky. This action is not removable.
5. Venue is proper in this Court because the conduct at issue took
place and had an effect in this County.
PARTIES
6. Plaintiff Russell Barkley is, and at all times relevant hereto
was, a shareholder of Comair and is a citizen of the State of Florida.
7. Defendant Comair is a corporation organized and existing under
the laws of the State of Kentucky with its principal place of business located
at Cincinnati/Northern Kentucky International Airport, Cincinnati, Ohio.
Comair operates as a transporter of passenger cargo in scheduled airline
service. Comair's common shares are listed and publicly traded on NASDAQ. As
of June 30, 1999, Comair had 95.6 million shares outstanding held by thousands
of shareholders.
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8. Defendant Raymond A. Mueller ("R. Mueller") serves as a director
of the Company.
9. Defendant Robert H. Castellini ("Castellini") serves as a
director of the Company.
10. Defendant Christopher J. Murphy, III ("Murphy") serves as a
director of the Company.
11. Defendant Peter M. Forster ("Forster") serves as a director of
the Company.
12. Defendant John A. Haas ("Haas") serves as a director of the
Company.
13. Defendant Gerald L. Wolken ("Wolken") serves as a director of
the Company.
14. Defendant David R. Mueller ("D. Mueller") serves as the Chairman
of the Board and Chief Executive Officer of the Company.
15. Defendant David A. Siebenburgen ("Siebenburgen") serves as a
director, President and Chief Operating Officer of the Company.
16. Defendant Delta Air Lines, Inc. ("Delta") is an airline carrier
based in Atlanta, Georgia.
17. The defendants named above, R. Mueller, Castellini, Murphy,
Forster, Haas, Wolken, D. Mueller and Siebenburgen are sometimes collectively
referred to herein as the "Individual Defendants." Comair and the Individual
Defendants are referred to herein as the "Comair Defendants."
Defendants' Fiduciary Duties
18. In any situation where the directors of a publicly traded
corporation undertake a transaction that will result in either (i) a change in
corporate control or (ii) a break-up of the corporation's assets, the
directors have an affirmative fiduciary obligation to obtain the highest value
reasonably available for the corporation's shareholders, and if such
transaction will result in a change of corporate control, the shareholders are
entitled to receive a significant premium. To diligently comply with these
duties, the directors may not take any action that:
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(a) adversely affects the value provided to the corporation's
shareholders;
(b) will discourage or inhibit alternative offers to purchase
control of the corporation or its assets;
(c) contractually prohibits them from complying with their fiduciary
duties;
(d) will otherwise adversely affect their duty to search and secure
the best value reasonably available under the circumstances for the
corporation's shareholders; and/or
(e) will provide themselves with preferential treatment at the
expense of, or separate from, the public shareholders.
19. As described herein, the Individual Defendants have breached
their fiduciary duties by taking actions designed to halt any other offers and
deter higher offers from other potential acquirers so as to protect the
interests of defendants at the expense of Comair's shareholders. Defendants
cannot possibly fulfill their fiduciary obligations after implementing
provisions which disable them from maximizing shareholder value. The
Individual Defendants have breached their fiduciary obligation to act
reasonably and establish a "level playing field" for all potential bidders
such that Comair's shareholders will benefit from fair competition to acquire
the Company.
CLASS ACTION ALLEGATIONS
20. Plaintiff brings this action pursuant to sections23.01 and 23.02
of the Kentucky Rules of Civil Procedure on his own behalf and as a class
action on behalf of all holders of Comair stock who are being and will be
harmed by defendants' actions described below (the "Class"). Excluded from the
Class are defendants herein and any person, firm, trust, corporation, or other
entity related to or affiliated with any defendants and their principals or
affiliates.
21. This action is properly maintainable as a class action.
22. The Class is so numerous that joinder of all members is
impracticable. According to Comair's SEC filings, there were more than 95.6
million shares of Comair common stock outstanding as of June 30, 1999.
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23. There are questions of law and fact which are common to the
Class and which predominate over questions affecting any individual Class
member. The common questions include, inter alia, the following:
(a) whether defendants have breached their fiduciary duty of
undivided loyalty, independence or due care with respect to plaintiff
and the other members of the Class in connection with the
acquisition;
(b) whether the Individual Defendants have breached their fiduciary
duty to secure and obtain the best price reasonable under the
circumstances for the benefit of plaintiff and the other members of
the Class in connection with the acquisition;
(c) whether defendants have breached any of their other fiduciary
duties to plaintiff and the other members of the Class in connection
with the acquisition, including the duties of good faith, diligence,
honesty and fair dealing;
(d) whether the defendants, in bad faith and for improper motives,
have impeded or erected barriers to discourage other offers for the
Company or its assets;
(e) whether the acquisition compensation payable to plaintiff and
the Class is unfair and inadequate; and
(f) whether plaintiff and the other members of the Class would be
irreparably damaged were the transactions complained of herein
consummated or alternatively whether they have suffered compensable
damages.
24. Plaintiff's claims are typical of the claims of the other
members of the Class and plaintiff does not have any interests adverse to the
Class.
25. Plaintiff is an adequate representative of the Class, has
retained competent counsel experienced in litigation of this nature and will
fairly and adequately protect the interests of the Class.
26. The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for the party opposing the Class.
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27. Plaintiff anticipates that there will be no difficulty in the
management of this litigation. A class action is superior to other available
methods for the fair and efficient adjudication of this controversy.
28. Defendants have acted on grounds generally applicable to the
Class with respect to the matters complained of herein, thereby making
appropriate the relief sought herein with respect to the Class as a whole.
BACKGROUND TO PROPOSED ACQUISITION
29. In the Summer and early Fall of 1999, Comair and Delta were in
intense negotiations concerning a new long-term service agreement to replace
the current one which expires at the end of October 1999.
30. From May 19 through May 24, 1999, defendant and Chairman of the
Board D. Mueller purchased 25,000 shares of Comair at $20 per share. D.
Mueller is the son of director defendant R. Mueller.
31. From June 7 through June 11, 1999, director defendant R. Mueller
(the father of defendant D. Mueller) purchased 19,350 shares of Comair at
prices ranging from $20.06 to $21.44 per share.
32. From August 17 through August 26, 1999, director defendant
Castellini purchased 3,000 shares of Comair at prices ranging from $23 to
$23.44 per share.
33. On September 9, 1999, Comair reported its highest August traffic
ever, with passenger boardings of 643,357 passengers, an 18.1% increase.
Comair also reported that revenue passenger miles increased 26.9% and
available seat miles increased 23.1%.
THE PROPOSED ACQUISITION
34. On October 18, 1999, Comair announced that it had reached a
definitive agreement with Delta in which Delta will acquire Comair for a total
consideration of approximately $1.0 billion, or $23.50 per share via a tender
offer. Under the terms of the agreement, Comair will be operated as a separate
subsidiary of Delta and its headquarters will remain at the
Cincinnati/Northern Kentucky International Airport.
35. Commenting on the announced acquisition, D. Mueller stated, in
part, that:
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"COMAIR Holdings Board of Directors unanimously supports
this transaction. It builds on the long and close
partnership between Delta and COMAIR. All of us at COMAIR
have the greatest respect for Delta and its people and we
look forward to an exciting future together."
36. Under the terms of the proposed acquisition, a Delta subsidiary
will make a tender offer to purchase all outstanding shares of common stock of
Comair for $23.50 per share. Comair has outstanding 95.5 million shares of
stock. Delta currently owns 21.1 million of these shares, or approximately 22%
of the outstanding shares.
37. Pursuant to employment agreements entered into by Comair with
defendant directors D. Mueller and Seibenburgen, these defendant directors may
receive in the form of a lump sum payment an amount equal to $2.7 million and
$2.1 million, respectively, upon consummation of the tender offer.
FIRST CAUSE OF ACTION
Claim for Breach of Fiduciary Duties
Against the Comair Defendants
38. Plaintiff repeats and realleges each allegation set forth
herein.
39. The Comair Defendants have violated fiduciary duties of care,
loyalty, candor and independence owed to the public shareholders of Comair and
have acted to put their personal interests ahead of the interests of Comair
shareholders.
40. By the acts, transactions and courses of conduct alleged herein,
these defendants, individually and acting as a part of a common plan, are
attempting to unfairly deprive plaintiff and other members of the Class of the
true value of their investment in Comair.
41. The Individual Defendants have violated their fiduciary duties
by entering into a transaction with Comair without regard to the fairness of
the transaction to Comair shareholders. The Comair Defendants directly
breached and/or aided and abetted the other defendants' breaches of fiduciary
duties to plaintiff and the other holders of Comair stock.
42. As demonstrated by the allegations above, the defendant
directors failed to exercise the care required, and breached their duties of
loyalty, good
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faith, candor and independence owed to the shareholders of Comair because,
among other reasons:
(a) they failed to take steps to maximize the value of Comair to its
public shareholders and they took steps to avoid competitive bidding,
to cap the price of Comair's stock and to give Delta an unfair
advantage, by, among other things, failing to solicit other potential
acquirers or alternative transactions;
(b) they failed to properly value Comair;
(c) they ignored or did not protect against the numerous conflicts
of interest resulting from the directors' own interrelationships, or
connection with the Delta transaction;
(d) the proposed acquisition price is below where the price of
Comair common stock traded just two months prior;
(e) the Board of Directors of Comair is controlled by Delta which
owns over 22% of Comair's outstanding stock and poses a threat to
each director's ability to remain on the Board; and
(f) as a result of the acquisition, certain directors will receive
monetary payments that they would not have otherwise received,
including "short swing" profits and "change of control payments."
43. Because the Individual Defendants dominate and control the
business and corporate affairs of Comair and are in possession of private
corporate information concerning Comair's assets (including Comair's second
quarter 2000 results) businesses and future prospects, there exists an
imbalance and disparity of knowledge and economic power between them and the
public shareholders of Comair which makes it inherently unfair for them to
pursue any proposed transaction wherein they will reap disproportionate
benefits to the exclusion of maximizing stockholder value.
44. By reason of the foregoing acts, practices and course of
conduct, the Comair Defendants have failed to exercise ordinary care and
diligence in the exercise of their fiduciary obligations toward plaintiff and
the other members of the Class.
45. As a result of the actions of these defendants, plaintiff and
the Class have been and will be irreparably damaged in that they have not and
will not
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receive their fair portion of the value of Comair's assets and businesses and
have been and will be prevented from obtaining a fair price for their common
stock.
46. Unless enjoined by this Court, the Comair Defendants will
continue to breach their fiduciary duties owed to plaintiff and the Class, and
may consummate the proposed acquisition which will exclude the Class from its
fair share of Comair's valuable assets and businesses, and/or benefit them in
the unfair manner complained of herein, all to the irreparable harm of the
Class, as aforesaid.
47. The Comair Defendants are engaging in self-dealing, are not
acting in good faith toward plaintiff and the other members of the Class, and
have breached and are breaching their fiduciary duties to the members of the
Class.
48. As a result of these defendants' unlawful actions, plaintiff and
the other members of the Class will be irreparably harmed in that they will
not receive their fair portion of the value of Comair's assets and business
and will be prevented from obtaining the real value of their equity ownership
of the Company. Unless the proposed acquisition is enjoined by the Court,
these defendants will continue to breach their fiduciary duties owed to
plaintiff and the members of the Class, will not engage in arm's-length
negotiations on the acquisition terms, will not supply to Comair's minority
stockholders sufficient information to enable them to cast informed votes on
the proposed acquisition and may consummate the proposed acquisition, all to
the irreparable harm of the members of the Class.
49. Plaintiff and the members of the Class have no adequate remedy
at law. Only through the exercise of this Court's equitable powers can
plaintiff and the Class be fully protected from the immediate and irreparable
injury which defendants' actions threaten to inflict.
SECOND CAUSE OF ACTION
Aiding and Abetting of Breach of Fiduciary
Duties Against Delta
50. Plaintiff repeats and alleges each allegation set forth herein.
51. Delta aided and abetted the Comair Defendants' breaches of
fiduciary duties owed to Comair shareholders to maximize shareholder value by
actively participating and colluding in the Comair Defendants' breaches. Delta
aided in timing the acquisition to close before Comair or any other party had
an opportunity to assess the true value of Comair's assets and before Comair
reveals its second quarter results, all of which has deprived the Comair
shareholders of
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the highest value available to them. Delta is a controlling shareholder of
Comair and had access to certain information concerning Comair's true value
that is not otherwise available to the investing public. As a result of
Delta's conduct alleged herein, Delta benefitted financially.
52. Defendants must be enjoined from continuing with the tender
offer. Only through this Court's exercise of its broad equitable powers can
plaintiff and the Class be fully protected from the immediate and irreparable
injury that defendants' actions threaten to inflict.
PRAYER FOR RELIEF
WHEREFORE, plaintiff demands judgment and preliminary and permanent
relief, including injunctive relief, in his favor and in favor of the Class
and against defendants as follows:
A. Declaring that this action is properly maintainable as a class
action;
B. Declaring and decreeing that the acquisition agreement was
entered into in breach of the fiduciary duties of the defendants and is
therefore unlawful and unenforceable;
C. Enjoining defendants, their agents, counsel, employees and all
persons acting in concert with them from consummating the acquisition via a
tender offer which is scheduled to commence no later than October 22, 1999,
unless and until the Company adopts and implements a procedure or process to
obtain the highest possible price for shareholders;
D. Directing the Individual Defendants to exercise their fiduciary
duties to obtain a transaction which is in the best interests of Comair's
shareholders until the process for the sale or auction of the Company is
completed and the highest possible price is obtained;
E. Rescinding, to the extent already implemented, the acquisition
agreement or any of the terms thereof;
F. In the event the acquisition is consummated, awarding
compensatory damages against defendants, jointly and severally, in an amount
to be determined at trial, together with pre-judgment interest at the maximum
rate allowable by law;
G. Imposition of a constructive trust, in favor of plaintiff, upon
any benefits improperly received by defendants as a result of their wrongful
conduct;
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H. Awarding plaintiff the costs and disbursements of this action,
including reasonable attorneys' and experts' fees; and
I. Granting such other and further relief as this Court may deem
just and proper.
JURY DEMAND
Plaintiff demands a trial by jury.
DATED this 19th day of October, 1999.
MIDDLETOWN & REUTLINGER
CHARLES G. MIDDLETON, III
-----------------------------------
CHARLES G. MIDDLETON, III
2500 Brown & Williamson Tower
Louisville, KY 40202
Telephone: 502/584-1135
502/561-0442 (fax)
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
DARREN J. ROBBINS
RANDALL H. STEINMEYER
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
619/231-7423 (fax)
Attorneys for Plaintiff
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