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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1/A
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
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COMAIR HOLDINGS, INC.
(Name of Issuer)
DELTA AIR LINES, INC.
DELTA AIR LINES HOLDINGS, INC.
KENTUCKY SUB, INC.
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Common Stock, No Par Value
(Title of Class of Securities)
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199789 10 8
(CUSIP Number of Class of Securities)
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Robert S. Harkey, Esquire
Senior Vice President - General Counsel
Delta Air Lines, 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)
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With Copies to:
Joseph Rinaldi
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
(212) 450-4000
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October 22, 1999
(Date Tender Offer First Published, Sent or Given to Security Holder)
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<PAGE>
CUSIP No. 199789 10 8
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14D-1/A
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1. NAMES OF REPORTING PERSONS
Delta Air Lines, Inc.
IRS IDENTIFICATION NO. 58-0218548
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
BK
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,072,655
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
22.06%
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10. TYPE OF REPORTING PERSON
CO
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CUSIP No. 199789 10 8
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14D-1/A
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1. NAMES OF REPORTING PERSONS
Delta Air Lines Holdings, Inc., a wholly owned subsidiary of
Delta Air Lines, Inc.
IRS IDENTIFICATION NO. 51-0323487
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
AF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,072,655
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
22.06%
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10. TYPE OF REPORTING PERSON
CO
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3
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CUSIP No. 199789 10 8
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14D-1/A
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1. NAMES OF REPORTING PERSONS
Kentucky Sub, Inc., an indirect wholly owned subsidiary of
Delta Air Lines, Inc.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
AF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
KENTUCKY
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,072,655
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
22.06%
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10. TYPE OF REPORTING PERSON
CO
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This Amendment No.1 amends and supplements the Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1") filed on October 22, 1999 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") and (iii) Delta Air Lines Holdings, Inc., a Delaware
corporation and a direct wholly-owned subsidiary of Delta, relating 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 as Exhibits (a)(1) and (a)(2) to the Schedule 14D-1.
Capitalized terms not separately defined herein shall have the meanings
specified in the Schedule 14D-1.
Item 10. Additional Information
Item 10(e) is hereby amended and supplemented as follows:
On October 19, 1999, an action styled Schear v. Comair Corporation, et
al., Index No. 99-CI-1213, was commenced by a purported Comair shareholder in
the Boone County Circuit Court, Commonwealth of Kentucky. On October 22, 1999,
an action styled Amend v. Comair Holdings, Inc., et al., Index No.
99-CI-01233, was commenced by a purported Comair shareholder in the same
court. On October 25, 1999, an action styled Barnett v. Comair Holdings, Inc.,
et al., Index No. 99-CI-01242, was commenced by a purported Comair shareholder
in the same court. On October 28, 1999, plaintiffs in those three actions
filed a first amended consolidated class action complaint in the Boone County
Circuit Court, under the caption Schear v. Comair Corporation, et al., Index
No. 99-CI-1213, a copy of which is attached to this Amendment No. 1 as Exhibit
(g)(3) and is incorporated herein by reference. On October 29, 1999, the Boone
County Circuit Court consolidated the three actions. The amended complaint
names as defendants Comair, the members of the Comair Board and Delta and
seeks to proceed on behalf of a purported class of Comair shareholders other
than the defendants. It alleges that the price for Comair shares agreed to in
the Merger Agreement is inadequate, that the members of the Comair Board
breached their fiduciary duties to Comair shareholders by allegedly failing to
thoroughly investigate the value of Comair before entering into the Merger
Agreement, and that Delta purportedly aided and abetted these alleged breaches
of duty, and among other things also makes other related claims against the
Comair Board and Comair's financial advisor, Morgan Stanley Dean Witter. The
amended complaint seeks preliminary and permanent injunctive relief against
the Transaction, compensatory and/or rescissory damages in an unspecified
amount and plaintiffs' costs and attorneys' fees.
On October 28, 1999, an action styled Deutch v. Mueller, et al., Case No.
A9906534, was commenced by a purported Comair shareholder in the Court of
Common Pleas of Hamilton County, Ohio. A copy of the complaint is attached to
this Amendment No. 1 as Exhibit (g)(4) and is incorporated herein by
reference. The complaint in the Deutch action names as defendants Comair, the
members of the Comair Board and Delta. It makes allegations and seeks relief
substantially similar to the allegations made and relief sought in the Schear
amended complaint and in the Barkley complaint.
On October 27, 1999, plaintiff in the Barkley action filed an ex parte
motion for temporary restraining order, seeking a temporary restraining order
enjoining the Offer and the Merger and invalidating certain provisions of the
Merger Agreement. Plaintiff in the Barkley action also sought expedited
discovery. At a hearing before the Jefferson County Circuit Court on October
28, 1999, those applications were presented by the plaintiffs. On October 29,
1999, the Court issued an opinion and order denying plaintiff's motions. A
copy of the opinion and order is attached to this Amendment No. 1 as Exhibit
(g)(5) and is incorporated herein by reference.
On October 22, 1999, plaintiffs in the Schear action filed a motion for
expedited discovery and preliminary injunctive relief, seeking among other
things a temporary injunction preventing the closing of the Offer and
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directing that expedited discovery occur. Argument on plaintiffs' motion was
presented by the parties at a hearing before the Boone County Circuit Court on
October 29, 1999. At the conclusion of the hearing, the Court denied the
motion for a preliminary injunction and overruled the motion for expedited
discovery.
Comair, the Comair Board and Delta believe that the claims asserted against
them in all of the foregoing cases are without merit and intend to defend
these lawsuits vigorously.
Item 11. Material to Be Filed as Exhibits
Item 11 is supplemented as follows:
(g)(3) Plaintiff's First Amended Consolidated Class Action Complaint filed
on October 28, 1999 in the Circuit Court of Boone County, Kentucky
in an action entitled Schear v. Comair Corporation, et al.
(g)(4) Class Action Complaint filed on October 28, 1999 in the Court of
Common Pleas of Hamilton County, Ohio in an action entitled Deutch
v. Mueller, et al.
(g)(5) Opinion and Order in Barkley v. Comair Holdings, Inc., et al.
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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.
November 1, 1999 DELTA AIR LINES, INC.
By: /s/ M. Michele Burns
-----------------------------
Name: M. Michele Burns
Title: Vice President and Treasurer
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
<PAGE>
EXHIBIT INDEX
Exhibit
No.
- -------
(g)(3) Plaintiff's First Amended Consolidated Class Action Complaint filed on
October 28, 1999 in the Circuit Court of Boone County, Kentucky in an
action entitled Schear v. Comair Corporation, et al.
(g)(4) Class Action Complaint filed on October 28, 1999 in the
Court of Common Pleas of Hamilton County, Ohio in an
action entitled Deutch v. Mueller, et al.
(g)(5) Opinion and Order in Barkley v. Comair Holdings, Inc. et al.
EXHIBIT (g)(3)
BOONE COUNTY CIRCUIT COURT
COMMONWEALTH OF KENTUCKY
NEAL SCHEAR, and )
STEVE FRANKLIN, CO-TRUSTEE FOR THE )
DAVID H. LIEBSCHUTZ IRREVOCABLE TRUST, )Index No. 99-CI-1213
on behalf of themselves and all others )Judge Bamberger
similarly situated, )
)
Plaintiffs, )
vs. )
)
COMAIR HOLDINGS, INC., DELTA AIR LINES, )
INC., DAVID R. MUELLER, RAYMOND A. )
MUELLER, ROBERT H. CASTELLINI, )
CHRISTOPHER J. MURPHY, III, PETER H. )
FORSTER, JOHN A. HAAS, GERALD L. WOLKEN, )
and DAVID A. SIEBENBURGEN )
Defendants. )
)
)
)
)
- -------------------------------------------- )
GREGORY T. AMEND, on behalf of )
himself and all others similarly situated, )Index No. 99-CI-1233
)Judge Bamberger
Plaintiffs, )
vs. )
)PLAINTIFFS' FIRST
COMAIR HOLDINGS, INC., DELTA AIR LINES, )AMENDED CONSOLIDATED
INC., DAVID R. MUELLER, RAYMOND A. )CLASS ACTION COMPLAINT
)----------------------
MUELLER, ROBERT H. CASTELLINI, )
CHRISTOPHER J. MURPHY, III, PETER H. )
FORSTER, JOHN A. HAAS, GERALD L. WOLKEN, )
and DAVID A. SIEBENBURGEN )
Defendants. )
)
- -------------------------------------------- )Index No. 99-CI-1242
ARNOLD R. BARNETT, on behalf of )Judge Bamberger
himself and all others similarly situated, )
)
Plaintiffs, )
vs. )
)
COMAIR HOLDINGS, INC., DELTA AIR LINES, )
INC., DAVID R. MUELLER, RAYMOND A. )
MUELLER, ROBERT H. CASTELLINI, )
CHRISTOPHER J. MURPHY, III, PETER H. )
FORSTER, JOHN A. HAAS, GERALD L. WOLKEN, )
and DAVID A. SIEBENGURGEN )
)
Defendants )
)
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PLAINTIFFS' FIRST AMENDED CONSOLIDATED
CLASS ACTION COMPLAINT
Plaintiffs, as and for their class action complaint, allege upon
personal knowledge as to themselves and their own acts, and upon information
and belief derived from, inter alia, a review of documents filed with the
Securities Exchange Commission and publicly available news sources, such as
newspaper articles, as to all other matters, as follows:
NATURE OF THE ACTION
1. This is a shareholder class action on behalf of the stockholders
of Comair Holdings, Inc. ("Comair" or the "Company") against its directors and
others to enjoin defendants' actions related to the sale of Comair to
defendant Delta Air Lines, Inc. ("Delta"), and to obtain other appropriate
relief.
PARTIES
2. Plaintiff, Neal Schear, owns shares of Comair common stock, and
has owned them at all relevant times.
3. Plaintiff, Steve Franklin, Co-Trustee for the David H.
Liebschutz Irrevocable Trust, owns shares of Comair common stock and has owned
them at all relevant times.
4. Plaintiff, Gregory T. Amend, owns shares of Comair common stock,
and has owned them at all relevant times.
5. Plaintiff, Arnold R. Barnett, owns shares of Comair common
stock, and has owned them at all relevant times.
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6. Arnold R. Barnett controls, through various family accounts,
approximately 80,000 shares of Comair.
7. Defendant Comair is a Kentucky corporation and is headquartered
at the Cincinnati/Northern Kentucky International Airport in Hebron, Kentucky.
8. Delta owns approximately twenty-two percent of Comair's
outstanding common stock. Comair is designated "Delta Connection" carrier, and
operates all its flights under the DL code. Under a marketing agreement,
Comair is able to offer passengers joint fares, coordinated schedules for
timely connections and Delta frequent flier mileage. Additionally, in return
for set fees, Delta handles Comair's reservations and handles flights at some
airport locations. Approximately forty-five percent of Comair's passengers in
fiscal year 1999 connected with Delta flights. Comair's service as a Delta
Connection carrier is performed under a ten year marketing agreement, which
was entered into in October 1989. Delta's ability to renew or not to renew
that marketing agreement in October 1999 gave it significant leverage over
Comair and the Individual Defendants, particularly since the Individual
Defendants apparently failed to exercise their fiduciary duties and prepare
for the possibility that Delta might not renew by adequately exploring
alliances with other major airlines.
9. Defendant Delta is a corporation duly organized and existing
under the law of the state of Delaware, with its principal executive offices
located at 1030 Delta Boulevard, Hartsfield Atlanta International Airport,
Atlanta, Georgia. Delta is the third largest airline based in the United
States and operates a hub and spoke flight system from a number of hubs,
including Atlanta, Cincinnati/ Northern Kentucky, Salt Lake City and Orlando.
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10. Defendants David R. Mueller, Raymond A. Mueller, Robert H.
Castellini, Christopher J. Murphy, III, Peter H. Forster, John A. Haas, Gerald
L. Wolken and David A. Siebenburgen (the "Individual Defendants") are all
members of Comair's board of directors. In addition, defendant David R.
Mueller is Chairman and CEO of Comair.
11. By virtue of their positions as directors, and where applicable,
officers of Comair and/or their exercise of control and ownership over the
business and corporate affairs of Comair, the Individual Defendants have, and
at all relevant times had, the power to control and influence and did control
and influence and cause Comair to engage in the practices complained of
herein. Each Individual Defendant owed and owes Comair and its shareholders,
fiduciary obligations and were and are required to: (1) use their ability to
control and manage Comair in a fair, just and equitable manner; (2) act in
furtherance of the best interests of Comair and its shareholders; (3) act to
maximize shareholder value in connection with any change in ownership and
control; (4) govern Comair in such a manner as to heed the expressed views of
its public shareholders; (5) refrain from abusing their positions of control;
and (6) not to favor their own interests at the expense of Comair and its
public shareholders.
12. Each defendant herein is sued individually and/or as a
conspirator and aider and abettor. The Individual Defendants are also sued in
their capacity as directors of Comair. The liability of each defendant arises
from the fact that they have engaged in all or part of the unlawful acts,
plans, schemes, or transactions complained of herein.
CLASS ACTION ALLEGATIONS
13. Plaintiffs bring this action as a class action pursuant to
Kentucky Civil Rule 23 et. seq. on behalf of all Comair common stock holders.
Excluded from the class are defendants,
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members of the immediate families of the defendants, their heirs and assigns,
and those in privity with them.
14. The members of the Class are so numerous that joinder of all of
them would be impracticable. While the exact number of Class members is
unknown to plaintiffs, and can be ascertained only through appropriate
discovery, plaintiffs believe there are thousands of Class members. Comair has
over 95 million shares of common stock outstanding.
15. Plaintiffs' claims are typical of the claims of the Class, since
plaintiffs and the other members of the Class have and will sustain damages
arising out of defendants' breaches of their fiduciary duties. Plaintiffs do
not have any interests that are adverse or antagonistic to those of the Class.
Plaintiffs will fairly and adequately protect the interests of the Class.
Plaintiffs are committed to the vigorous prosecution of this action and have
retained counsel competent and experienced in this type of litigation.
16. There are questions of law and fact common to the members of the
Class that predominate over any questions which, if they exist, may affect
individual class members. The predominant questions of law and fact include,
among others, whether:
(a) the defendants have and are breaching their fiduciary duties to
the detriment of Comair shareholders;
(b) the Class has been damaged and the extent to which
members of the Class have sustained damages, and
what is the proper measure of those damages.
17. A class action is superior to all other available methods for the
fair and efficient adjudication of this controversy, since joinder of all
members is impracticable. Further, as individual damages may be relatively
small for most members of the Class, the burden and expense of prosecuting
litigation of this nature makes it unlikely that members of the Class
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would prosecute individual actions. Plaintiffs anticipate no difficulty in the
management of this action as a class action. Further, the prosecution of
separate actions by individual members of the class would create a risk of
inconsistent or varying results, which may establish incompatible standards of
conduct for defendants.
SUBSTANTIVE ALLEGATIONS
18. On October 18, 1999, Delta announced that it had agreed to
purchase the seventy- eight percent of Comair stock that it does not already
own for $23.50 a common share. The announcement said that when the acquisition
was completed, Comair would become a wholly owned unit of Delta, and that the
directors of both Comair and Delta had approved the transaction.
19. Delta's proposed purchase price is substantially below Comair's
average stock price for the year to date, which ranged as high as $29.12 per
share. Delta used its ability to forestall and manipulate negotiations for
another ten-year Delta Connection Agreement with Comair to drive down the
price of Comair stock prior to making its acquisition proposal. The existing
Delta Connection Agreement was set to expire on October 31, 1999. Securities
analysts agree that the price that Delta has offered for Comair shares is too
low. "We felt the common shareholders are leaving money on the table for
Comair," said Mike Dempsey, vice-president for Robert W. Baird & Co. "We were
quite surprised - $23.50 was low for Comair. We felt it would come in a little
higher," said Tracy Barker, first vice-president of Gradison McDonald
Investments.
20. Plaintiff Arnold R. Barnett further alleges that he was informed
by a Comair board member that Delta specifically threatened to do the
following:
a. crush Comair by flying Delta planes on Comair routes, even if it
meant that the Delta planes would be largely empty;
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b. engage in a hostile takeover for Comair; and
c. bring in another regional airline to compete with
Comair on Comair's existing routes.
21. By entering the agreement with Delta, the Individual Defendants
have allowed the price of Comair stock to be capped, thereby depriving
plaintiff and the Class of the opportunity to realize any increase in the
value of Comair shares. Despite the obvious long-term value of the Comair
acquisition for Delta, Comair shareholders will be receiving an inadequate and
unfair takeover premium over Comair's stock price prior to announcement of the
transaction, and inadequate value in relation to Comair's contribution to the
pro forma combined value of the two firms. This is particularly so since
Comair had traded at almost $30 per share earlier in the year. Further, the
substantial benefits which Delta will gain by virtue of acquiring Comair are
not being adequately compensated for sale price.
22. By entering into negotiations with Delta, Comair's board had
initiated a process to sell Comair, which imposes heightened fiduciary
responsibilities and requires enhanced scrutiny by the Court. However, the
terms of the proposed transaction were not the result of an auction process or
active market check. Rather, they were arrived at without a full and thorough
investigation by the Individual Defendants; and the price and process was
intrinsically unfair and inadequate from the standpoint of Comair's
shareholders.
23. The Individual Defendants failed to make an informed decision,
as no market check of Comair's value was obtained. In agreeing to the merger,
the Individual Defendants failed to properly inform themselves of Comair's
highest transactional value. In fact, according to Delta's 14-D filed October
22, 1999, defendants instructed their financial advisor, Morgan Stanley, to
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not solicit interest from any party with respect to the acquisition of Comair
or any of its assets other than Delta.
24. The Individual Defendants have violated the fiduciary duties
they owe to the shareholders of Comair. The Individual Defendants agreement to
the terms of the transaction, its timing, and the failure to auction Comair
and invite other bidders, and defendants failure to provide a market check,
demonstrate a clear absence of the exercise of due care and of loyalty to
Comair's public shareholders.
25. The Individual Defendants fiduciary obligations under the
circumstances of Delta's offer obligated them to:
Undertake an appropriate evaluation of Comair's net worth as a
merger/acquisition candidate, taking into account its long term
prospects, and the substantially higher price at which Comair's
stock had traded earlier in the year;
Actively evaluate the proposed transaction and engage in a
meaningful auction with third parties in an attempt to obtain
the best value for Comair's public shareholders;
Act independently so that the interests of Comair's public
shareholders will be protected and enhanced; and
Adequately ensure that no conflicts of interest exist between
the Individual Defendants own interests and their fiduciary
obligations to maximize shareholder value nor did they
adequately ensure that no conflicts of interest existed between
Morgan Stanley, Comair's financial advisor, and Delta, or, if
such conflicts exist, to ensure that all conflicts are resolved
in the best interests of Comair's public shareholders.
26. The Individual Defendants have breached their fiduciary duties
by reason of the acts and transactions complained of herein, including their
decision to sell Comair to Delta without making the requisite effort to obtain
the best offer possible.
27. Plaintiffs and other members of the Class have been and will be
damaged in that they have not and will not receive their fair proportion of
the value of Comair's assets and
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business, will be divested from their right to share in Comair's future growth
and development and have been and will be prevented from obtaining a fair and
adequate price for their shares of Comair common stock.
28. The consideration to be paid to class members in the proposed
merger is unfair and inadequate because, inter alia,:
The intrinsic value of Comair's common stock is in excess of the
amount offered by Delta, giving due consideration to the current
decline of Comair's stock from its yearly high (due in
substantial measure to Delta's manipulation of negotiations
relating to the extension of Delta's marketing contract with
Comair), its anticipated operating results, net asset value,
cash flow, profitability and established markets;
The sale price is not the result of an appropriate consideration
of the value of Comair because the Comair board approved the
proposed transaction without undertaking steps to accurately
ascertain Comair's value through open bidding or at least a
market check mechanism;
The terms of the proposed merger fail to include appropriate
mechanisms to protect class members against a decline in the
price of Comair stock; and
The Individual Defendants did not appoint or retain any truly
independent person or entity to negotiate for or on behalf of
Comair's public shareholders to promote their best interests in
the merger transaction.
29. The Individual Defendants have breached their duty of loyalty to
Comair's public shareholders by using their control of Comair to force
plaintiffs and the Class to exchange their equity interest in Comair for
unfair consideration, and to deprive Comair's public shareholders of the
maximum value to which they are entitled.
30. The Individual Defendants also breached their fiduciary duties
to the shareholders by not creating a committee of outside directors to weigh
the merits of the Merger Agreement
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and all the other alternatives available to Comair, independent of the influence
of the inside directors.
31. The terms of the proposed merger are grossly unfair to the
class, and the unfairness is compounded by the gross disparity between the
knowledge and information possessed by the Individual Defendants by virtue of
their positions of control of Comair and that possessed by Comair's public
shareholders. Defendants' intent is to take advantage of this disparity and to
induce class members to relinquish their Comair shares at an unfair price on
the basis of incomplete or inadequate information.
32. Delta has knowingly aided and abetted the breaches of fiduciary
duty committed by the Individual Defendants. Further, the proposed sale of
Comair to Delta could not take place without the knowing participation of
Delta.
33. By reason of the foregoing, plaintiffs and each member of the
Class are suffering irreparable injury and damages.
34. Additionally, according to the Merger Agreement, two thirds of
Comair stock must be tendered before Delta can claim that the buyout of Comair
is complete. As such, Comair's shareholders have a critical obligation in
determining whether Comair remains an independent company or whether it
becomes a Delta subsidiary. However, the shareholders cannot make an informed
decision as to whether to tender their shares when the information provided by
Comair and Delta materially misstates the value of those shares. Allowing the
Offer to proceed effectively takes the important decision afforded the
shareholders out of their hands and puts it in the hands of the clock, forcing
the shareholders to decide the issue essentially blindfolded. For example, the
Notice of Guaranteed Delivery, which is sent to every Comair shareholder,
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misleads the class into believing that the merger is final and they are
required to tender their shares. Specifically, the Notice provides that the
form "must be used." Several Comair shareholders already have been mislead by
that language into believing that they have no choice but to tender their
shares. There is no adequate remedy at law that protects for the shareholders
the ability to make an informed decision as to whether or not Comair remains
an independent company.
35. Enjoining the Offer from proceeding, or requiring that the Offer
remain open would not have any material impact on Delta or on Comair because
the Merger Agreement authorizes both that the Offer can be extended and that
the Delta Connection Agreement, set to expire on October 31, 1999 will be
extended on a month to month basis. Also, according to the 14-D, both Comair's
and Delta's timeline for completing the buyout extends to April 30, 2000. As
such, extending the period for meeting the necessary criteria for the buyout
has already been incorporated into the Merger Agreement's buyout price.
36. Plaintiffs and other members of the Class have no adequate
remedy at law.
INDIVIDUAL DEFENDANTS BREACHED THEIR
FIDUCIARY DUTY BY KNOWINGLY RELYING ON
MORGAN STANLEY'S FAIRNESS OPINION WHICH
FAILS TO MEET BASIC STANDARDS OF
OBJECTIVITY
37. The Individual Defendants knew or should have known that Morgan
Stanley was not a disinterested financial advisor to Comair regarding the
fairness of Delta's buyout offer, and, as such, their reliance on Morgan
Stanley's fairness opinion was unjustified.
38. According to the Form 14-D filed by Delta on October 22, 1999
("Form 14-D"), Morgan Stanley will receive a fee of $10,000,000 if the buyout
is consummated. If the buyout is
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not consummated Morgan Stanley receives a fee based upon the hours worked as
Comair's financial advisor for the roughly three months work they performed.
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.
39. Comair has also agreed to indemnify Morgan Stanley for liability
in connection with the work they performed for Comair, thereby removing an
important check on Morgan Stanley's work product.
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.
40. Moreover, Comair's Board of Directors retained Morgan Stanley on
or shortly after August 10, 1999, for the purpose of exploring Comair's
ongoing business options in light of the impending October 31, 1999 expiration
of the Delta connection agreement. The Individual Defendants knew or should
have known that, less than one month prior, Morgan Stanley performed
significant work for Delta on various financial matters, receiving substantial
fees in return.
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
12
<PAGE>
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.
41. Comair's Board of Directors also knew or should have known that
Morgan Stanley's fairness opinion substantially and materially undervalued the
value of Comair's stock.
THE DIRECTORS' OBJECTIVITY WAS BOUGHT OFF BY
FINANCIAL INCENTIVES IN THE TENDER OFFER
42. The directors of Comair owe a fiduciary duty to act in the
shareholders best interests. However, the Tender Offer provides that the
directors receive substantial financial and other benefits in the event that
Delta's buyout of Comair is consummated.
43. According to the 14-D, Defendants Mueller and Siebenburgen
receive the following compensation if the buyout is successful:
Mr. Mueller is employed as the Chief Executive Officer and
Chairman of the Board of Directors of Comair and has a base
salary of $550,000. 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.
13
<PAGE>
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.
44. Under the Merger Agreement, Defendant Mueller's stock options
entitle him to a payment of $12,542,337 if the buyout is successful. Likewise,
Defendant Siebenburgen is entitled to $6,506,483 from his stock options if the
buyout is successful.
45. According to the 14-D, Defendant Raymond A. Mueller receives the
following compensation if the buyout is successful:
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 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
14
<PAGE>
of Shares for payment in the Offer will constitute a Change in
Control for purposes of the Consulting Agreement.
46. The outside directors also received substantial financial
inducements to agree with the Tender Offer, including a lump sum payment of
$100,000 for each director, and lifetime free air travel on Comair for each
outside director and his family. According to the 14-D:
In August Comair and each of Peter H. Forster, John A. Haas,
Gerald L. Walker [sic], 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-mployee 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.
47. In addition, various stock options were granted to the outside
directors in 1990, 1992, and 1998. Under the terms of the Merger Agreement if
consummated, the outside directors would receive substantial cash payments
from the cancellation of those options. According to the 14-D, the outside
directors held 455,680 stock options, and they would receive $7,258,982 if the
Offer is completed successfully. As such, the required independence of the
outside directors has been compromised by the sweetheart deal they have
received in the Merger Agreement.
WHEREFORE, plaintiff demands judgment as follows:
A. Determining that this action is a proper class action under
the Kentucky Civil Rules, and that plaintiff is proper class representatives;
B. Declaring that defendants have breached their fiduciary duties
to plaintiffs and
15
<PAGE>
the Class and aided and abetted such breaches;
C. Temporarily and permanently enjoining the proposed sale of
Comair to Delta and, if the proposed sale is consummated, rescinding it;
D. Awarding plaintiff and the Class compensatory and/or
rescissory damages as allowed by law;
E. Awarding interest, attorney's fees, expert fees and other
costs, in an amount to be determined; and
F. Granting such other relief as the Court may find just and
proper.
16
<PAGE>
DATED: October 27, 1999 /s/ Michael G. Brautigam / MGB
------------------------------------------
Michael G. Brautigam / MGB
Gene Mesh
Michael G. Brautigam (Ky. Bar No. 86789)
R. Michael Phebus
GENE MESH & ASSOCIATES
2605 Burnet Avenue
Cincinnati, Ohio 45219-2502
(513) 221-8800
(513) 221-1097 (fax)
/s/ Andre E. Busald / MGB
------------------------------------------
Andre E. Busald / MGB
Andre E. Busald (Ky. Bar No. 09850)
BUSALD FUNK ZEVELY, PSC
226 Main Street
P.O. Box 6910
Florence, Kentucky 41022-6910
(606) 746-5287
(606) 525-1040 (fax)
/s/ John Evans / MGB
------------------------------------------
John Evans / MGB
John Evans (Ky. Bar No. 81025)
David J. Manogue
SPECTER SPECTER EVANS
& MANOGUE, P.C.
Koppers Building, 26th Floor
Pittsburgh, PA 15219
(412) 642-2300
(412) 642-2309 (fax)
/s/ Richard B. Brualdi / MGB
------------------------------------------
Richard B. Brualdi / MGB
Law Offices of Richard B. Brualdi
29 Broadway, Suite 1515
New York, NY 10006
(212) 952-0602
Attorneys for Plaintiffs
EXHIBIT (g)(4)
Richard S. Wayne (0022390)
William K. Flynn (0029536)
Attorneys for Plaintiff
COURT OF COMMON PLEAS
HAMILTON COUNTY, OHIO
ESTHER DEUTCH, )
c/o Strauss & Troy )
150 East Fourth Street )
Cincinnati, OH 45202-4018 )
)
Plaintiff, )
)
vs. )
)
DAVID R. MUELLER, RAYMOND R. )
MUELLER, ROBERT H. CASTELLINI, ) Case No. A9906534
CHRISTOPHER J. MURPHY, III, PETER H. ) (Judge _____________)
FORSTER, JOHN A, HASS, GERALD R. )
WOLKEN, COMAIR HOLDINGS, INC. )
P.O. Box 75021 )
Cincinnati, OH 45275-0021 ) CLASS ACTION COMPLAINT
) ----------------------
)
and ) (Jury Trial Demanded)
)
DELTA AIRLINES )
Hartsfield Atlanta Int'l Airport )
P.O. Box 20706 )
Atlanta, GA 30320 )
)
Defendants. )
Plaintiff, by her attorneys, for her complaint against defendants,
alleges upon information and belief, except for paragraph 2 hereof, which is
alleged upon knowledge, as follows:
<PAGE>
1. Plaintiff brings this action pursuant to Rule 23 of the Ohio
Rules of Civil Procedure on her behalf and as a class action on behalf of all
persons, other than defendants and those in privity with them, who own the
common stock of Comair Holdings, Inc. ("Comair" or the "Company").
2. Plaintiff has been the owner of the common stock of the Company
since prior to the transaction herein complained of and continuously to date.
3. Comair is a corporation duly organized and existing under the
laws of the Commonwealth of Kentucky with its headquarters and principal place
of business in Cincinnati, Ohio. The Company is a Delta Connection carrier
which, through a code-share agreement, flies customers primarily from cities
in the Midwest and Florida to Delta's hub in Cincinnati, Ohio and Orlando,
Florida. The Company maintains its principal offices at P.O. Box 75021,
Cincinnati, Ohio.
4. Defendant Delta Air Lines ("Delta") is the record owner of
approximately 21.9% of the Company's outstanding common stock.
5. Defendant David R. Mueller is Chairman of the Board of Directors
of the Company and Chief Executive Officer of the Company.
6. Defendant Robert Mueller is a Director of the Company and the
father of David Mueller.
7. Defendants Robert H. Castellini, Christopher J. Murphy, III,
Peter H. Forster, John A. Hass, and Gerald R. Wolken are Directors of Comair.
8. The Individual Defendants, by reason of their corporate
directorships and executive positions, stand in a fiduciary position relative
to the Company's
2
<PAGE>
public shareholders, whose fiduciary duties, at all times relevant herein,
required them to exercise their best judgment, and to act in a prudent manner,
and in the best interest of the Company's minority shareholders. Said
Defendants owed the public shareholders of Comair the highest duty of good
faith, fair dealing, due care, loyalty, and full, candid and adequate
disclosure.
CLASS ACTION ALLEGATIONS
9. Plaintiff brings this action on her own behalf and as a class
action, pursuant to Rule 23 of the Ohio Rules of Civil Procedure, on behalf of
all security holders of the Company (except the Defendants herein and any
person, firm, trust, corporation, or other entity related to or affiliated
with any of the Defendants) and their successors in interest, who are or will
be threatened with injury arising from defendants' actions as more fully
described herein.
10. This action is properly maintainable as a class action.
11. The class is so numerous that joinder of all members is
impracticable. As of June 25, 1999, there were approximately 95,567,688 shares
of Comair common stock outstanding, of which approximately 78% is owned by
holders other than Defendant Delta and/or directors and officers of the
Company.
12. 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 and other common law duties owed by
them to Plaintiff and the members of the Class; (b) whether Defendants are
pursuing a
3
<PAGE>
scheme and course of business designed to eliminate the public securities
holders of Comair in violation of the laws of the State of Ohio in order to
enrich Delta at the expense and to the detriment of the Plaintiff and the
other public stockholders who are members of the class; (c) whether the
Individual Defendants have failed to maximize value for the public
shareholders of Comair; (d) whether the class is entitled to injunctive relief
or damages as a result of the wrongful conduct committed by Defendants; and
(e) whether the said proposed acquisition, hereinafter described, constitutes
a breach of the duty of fair dealing with respect to the Plaintiff and the
other members of the class.
13. Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. The
claims of the Plaintiff are typical of the claims of other members of the
Class and Plaintiff has the same interests as the other members of the Class.
Plaintiff will fairly and adequately represent the Class. A class action is
superior to any other type of adjudication of this controversy.
14. Defendants have acted in a manner which affects Plaintiff and
all members of the Class, thereby making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the class as a whole.
15. 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 Defendants, or adjudications with respect to
individual members of
4
<PAGE>
the Class which would, as a practical matter, be dispositive of the interests
of other members or substantially impair or impede their ability to protect
their interests.
SUBSTANTIVE ALLEGATIONS
16. Comair has operated as a "Delta Connection" carrier since 1984
pursuant to a marketing agreement with Delta, which expires on October 31,
1999 (the "code sharing agreement"). 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.
17. In the summer of 1999, representatives of Delta and Comair held
a series of discussions about the renewal and renegotiation of the code
sharing agreement. Delta indicated that the revenues payable to Comair would
be substantially reduced under any revised code sharing agreement.
18. On July 29, 1999, during one of these discussions,
representatives of Delta indicated that Delta would be interested in acquiring
Comair, rather than entering into a revised code sharing agreement.
19. On August 10, 1999, Comair held a regularly scheduled Board
meeting. At this meeting, the Comair Board was advised of status of the
negotiations surrounding the code sharing agreement and Delta's interest in
the possible acquisition of Comair. That same day, the Company amended the
employment agreements of Defendant David A. Mueller and certain other senior
officers of the Company. These amendments extended the employment
5
<PAGE>
agreements for three years and provided for lucrative cash payments in the
event of a change in control of the Company.
20. Additionally, the Company amended the compensation agreements of
Defendants Forster, Haas, Walker, Castellini, Murphy and Raymond Mueller, the
Company's non-employee directors. These amendments provided that each of the
outside Directors will receive a bonus payment of five times the annual
director fees in a lump sum cash payment in the event the Company is acquired
or merged with another company. The basic annual Director fee paid to the
Outside Directors is $20,000 per year so that each of the Outside Directors
will receive at least $100,000 when Delta completes its acquisition of Comair.
Additionally, Defendant Forster was paid $403,000 by Comair in connection with
the evaluation and negotiations of the transaction with Delta.
21. On October 18, 1999 Delta and Comair announced that the two
companies had signed a definitive merger agreement whereby Delta will acquire
Comair in an all cash transaction valued at $1.8 billion. Under the terms of
the agreement, Delta will commence a cash tender off at $23.50 per share for
all of the outstanding shares of Comair. Following the completion of the
tender offer, those shares not tendered will be converted into the right to
receive $23.50 per share in cash.
22. Analysts' reactions to the announcement of the proposed
acquisition were not favorable. On October 18, 1999, the Dow Jones News
Service reported that:
6
<PAGE>
Delta snapped up the smaller airline when its shares were cheap
enough to attract other suitors and the prospects of an independent
Comair were bright, analysts said. 'They had their own little world
there in Cincinnati and could function alone if they had too [sic],'
said airline consultant Bob Mann.
23. On or about October 22, 1999, Defendants mailed to Comair's
shareholders a Solicitation/Recommendation Statement on 14D-9 (the "14D-9")
purportedly describing, inter alia, the merger transaction, the history of the
negotiations between the companies, the opinion of Comair's financial advisor
and certain other purportedly relevant information.
24. The 14D-9 fails to disclose material information necessary for
Comair shareholders to make an informed decision. Comair has previously
announced that its passenger traffic for August and September 1999 had
increased 18.1% for August and had increased 8.3% for September compared with
those months in the previous year. Comair also announced that Revenue
Passenger Miles increased 26.9% for August and 16.5% for September and that
Available Seat Miles increased 23.1% for August and 23.1% for September as
compared with those months in the prior year. However, the most recent
financial information for the Company are its operating results for the three
months ended June 30, 1999, as set forth in the Tender Offer Statement on
Schedule 14D-1 (the "14D-1"). The failure to provide more recent financial
information is inexcusable in light of the fact that Delta's financial results
for its fiscal quarter ended September 30, 1999, are readily available and are
likely to be exceptional strong
7
<PAGE>
based on the Company's announcement concerning August and September.
Accordingly, Comair shareholders are being asked to make an irrevocable
decision regarding their investment in Comair on the basis of incomplete
information.
25. By entering into the agreement with Delta, the Comair Board has
initiated a process to sell the Company which imposes heightened fiduciary
responsibilities and requires enhanced scrutiny by the Court. However, the
terms of the proposed transaction were not the result of an auction process or
active market check; they were arrived at without a full and thorough
investigation by the Individual Defendants; and they are intrinsically unfair
and inadequate from the standpoint of the Comair shareholders.
26. The Individual Defendants failed to make an informed decision,
as no market check of the Company's value was obtained. In agreeing to the
merger, the Individual Defendants failed to properly inform themselves of
Comair's highest transactional value.
27. The Individual Defendants have violated the fiduciary duties
owed to the public shareholders of Comair. The Individual Defendants'
agreement to the terms of the transaction, its timing, and the failure to
auction the Company and invite other bidders, and Defendants' failure to
provide a market check demonstrate a clear absence of the exercise of due care
and of loyalty to Comair's public shareholders.
8
<PAGE>
28. The Individual Defendants' fiduciary obligations under these
circumstances require them to:
(a) Undertake an appropriate evaluation of Comair's net worth
as a merger/acquisition candidate; and
(b) Engage in a meaningful auction with third parties in an
attempt to obtain the best value for Comair's public shareholders.
29. The proposed bid serves no legitimate business purpose of Comair
but rather is an attempt by Defendants to unfairly benefit Delta from the
transaction at the expense of Comair's public stockholders. The proposed plan
will, for a grossly inadequate consideration, deny Plaintiff and the other
members of the Class their right to share proportionately in the future
success of Comair and its valuable assets, while permitting Delta to reap huge
benefits from the transaction.
30. The Individual Defendants have breached their fiduciary duties
by reason of the acts and transactions complained of herein, including their
decision to merge with Delta without making the requisite effort to obtain the
vest offer possible.
31. Plaintiff and other members of the Class have been and will be
damaged in that they have not and will not receive their fair proportion of
the value of Comair's assets and business, and will be prevented from
obtaining fair and adequate consideration for their shares of Comair common
stock.
9
<PAGE>
32. The consideration to be paid to class members in the proposed
merger is unfair and inadequate because, among other things:
(a) The intrinsic value of Comair's common stock is
materially in excess of the amount offered for those securities in the merger
in light of the fact that Comair shares have traded above $23.50 in the past
two months and giving due consideration to the anticipated operating results,
net asset value, cash flow, and profitability of the Company;
(b) The merger price is not the result of an appropriate
consideration of the value of Comair because the Comair Board approved the
proposed merger in without undertaking steps to accurately ascertain Comair's
value through open bidding or at least a "market check mechanism"; and
(c) By entering into the agreement with Delta, the
Individual Defendants have allowed the price of Comair stock to be capped,
thereby depriving Plaintiff and the Class of the opportunity to realize any
increase in the value of Comair stock.
(d) By reason of the foregoing, each member of the Class
will suffer irreparable injury and damages absent injunctive relief by this
Court.
(e) Defendant Delta knowingly aided and abetted the breaches
of fiduciary duty committed by the Individual Defendants in order to permit
Delta to acquire Comair at the lowest possible price. The proposed transaction
could not take place without Delta's knowing participation.
10
<PAGE>
33. Plaintiff and other members of the Class have no adequate remedy
at law.
WHEREFORE, Plaintiff and members of the Class demand judgment against
Defendants as follows:
(A) Declaring that this action is properly maintainable as a
class action and certifying Plaintiff as the representative of the Class;
(B) Preliminarily and permanently enjoining Defendants and
their counsel, agents, employees and all persons acting under, in concert
with, or for them, from proceeding with, consummating, or closing the proposed
transaction;
(C) In the event that the proposed transaction is
consummated, rescinding it and setting it aside, or awarding rescissory
damages to the class;
(D) Awarding compensatory damages against Defendants,
individually and severally, in an amount to be determined at trial, together
with pre-judgment and post-judgment interest at the maximum rate allowable by
law, arising from the proposed transaction;
(E) Awarding Plaintiff her costs and disbursements and
reasonable allowances for fees of Plaintiff's counsel and experts and
reimbursement of expenses; and
11
<PAGE>
(F) Granting Plaintiff and the class such other and further
relief as the Court may deem just and proper.
Dated: October 28, 1999
Respectfully submitted,
STRAUSS & TROY
By: /s/ Richard S. Wayne
---------------------------------
Richard S. Wayne (0022390)
William K. Flynn (0029536)
The Federal Reserve Building
150 East Fourth Street
Cincinnati, OH 45202-4018
(513) 621-2120
BERNSTEIN LIEBHARD
& LIFSHITZ, LLP
Stanley D. Bernstein
10 East 40th Street
New York, NY 10016
(212) 779-1414
12
EXHIBIT (g)(5)
No. 99 CI 06214
JEFFERSON CIRCUIT COURT
DIVISION 13
RUSSELL BARKLEY, On Behalf of
Himself and All Others Similarly Situated: PLAINTIFF
vs. OPINION AND ORDER
COMAIR HOLDINGS, INC., et al. DEFENDANTS
* * * * * * * * * * * * * * * * *
This matter came before the Court on a motion for a Temporary
Restraining Order brought by the Plaintiff, Russell Barkley, on behalf of
himself and all others similarly situated, to prohibit the Defendant Comair
Holdings, Inc. ("Comair") and its Board of Directors from consummating a
Tender Offer and Merger with Delta Air Lines, Inc. ("Delta"). The Court being
sufficiently advised, after reviewing the Plaintiff's motion and having heard
oral arguments from the parties' respective counsel (See Trial Tape: Ragozine
v. Greg, 30-13-99 VCR 075-A-2: 1 p.m. - 2:25 p.m.), will deny the motion on
the following grounds: (1) the allegations are insufficient to conclude that
the Plaintiff or the putative class-member shareholders will suffer
irreparable harm; and (2) the Defendants will likely be prejudiced and harmed
if the requested Temporary Restraining Order is issued. This matter is
therefore set down on the Court's docket for further proceedings and motions
on December 1, 1999, at 9:00 a.m.
<PAGE>
OPINION
The Plaintiff maintains that he and the other shareholders of Comair
will suffer immediate and irreparable injury if the Tender Offer and Merger is
allowed to proceed. The thrust of his argument to restrain Comair is the $50
million dollar "termination fee," the "no shop" provision in the Merger
Agreement, conflict of interests between financial advisors, and a breach of
the Board of Directors' fiduciary duties. While all of these allegations may
have merit, Comair shareholders may recover damages in court if they can prove
to the trier of facts that the Board of Directors did indeed breach its duties
to the shareholders. Unfortunately for the shareholders, their allegations do
not reach the standard that would require this Court to restrain a
"multi-billion" dollar transaction and risk the obvious harm that could result
to shareholders who support this transaction.
The Court has examined the standard espoused by Kentucky's leading
case, Maupin v. Stansbury, Ky. App., 575 S.W.2d 695 (1978), and finds that the
factors claimed by the Plaintiff have not been met in this action. There is no
clear showing "that immediate and irreparable injury to a concrete personal
right will occur," nor do the equities appear to require a "status quo," and
while the complaint does raise a serious question on the merits, the Plaintiff
has an adequate remedy at law. Certainly, the far reaching effects of the
"extraordinary relief" requested by the Plaintiff could have an adverse effect
on the very concept that the Plaintiff wishes to prevent (i.e., the
dissipation of the corporate assets of Comair).
This Court is concerned with the immediacy of the timing of the
Tender Offer and Merger and the allegations regarding the "no shop" provision.
Apparently, however, the
2
<PAGE>
period of twenty work days is within the guidelines of the federal
regulations, and appropriate notice has been given to the shareholders.
Furthermore, while there is a "no shop" provision, it is apparent that other
offers could be made to Comair if a suitable purchaser can be found.
Therefore, the Court enters the following Order:
ORDER
IT IS HEREBY ORDERED AND ADJUDGED that the motion for a Temporary
Restraining Order brought by Plaintiff, Russell Barkley, on behalf of himself
and all others similarly situated, is DENIED.
DATED this ____ day of October, 1999.
/s/ Geoffrey Morris
--------------------------------
GEOFFREY MORRIS, CHIEF JUDGE
Jefferson Circuit Court
3
