<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
COMAIR HOLDINGS, INC.
(Name of Subject Company)
---------------------
COMAIR HOLDINGS, INC.
(Name of Person Filing Statement)
COMMON STOCK, NO PAR VALUE PER SHARE
(Title of Classes of Securities)
199789108
(CUSIP Number of Class of Securities)
---------------------
RANDY D. RADEMACHER
SENIOR VICE PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICER
COMAIR HOLDINGS, INC.
P.O. BOX 75021
CINCINNATI, OH 45275
(606) 767-2550
(Name, Address and Telephone Number of Person authorized to
Receive Notices and Communications on Behalf of
the Person Filing Statement)
---------------------
WITH A COPY TO:
<TABLE>
<S> <C>
PETER D. LYONS, ESQ. RICHARD D. SIEGEL, ESQ.
SHEARMAN & STERLING KEATING, MUETHING & KLEKAMP P.L.L.
599 LEXINGTON AVENUE 1800 PROVIDENT TOWER
NEW YORK, NEW YORK 10022 ONE EAST FOURTH STREET
(212) 848-4000 CINCINNATI, OH 45202
(513) 579-6400
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") relates to is Comair
Holdings, Inc., a Kentucky corporation (together with its subsidiaries, where
applicable "Comair"). The address of the principal executive offices of Comair
is 2258 Tower Drive, Erlanger, Kentucky with a mailing address of P.O. Box
75021, Cincinnati, Ohio 45275. The title of the class of equity securities to
which this Schedule 14D-9 relates is common stock, no par value per share, of
Comair (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This Schedule 14D-9 relates to a tender offer by Kentucky Sub, Inc., a
Kentucky corporation (the "Kentucky Sub"), and a direct, wholly owned subsidiary
of Delta Air Lines Holdings, Inc., a Delaware corporation ("Delta Holdings"),
and an indirect, wholly owned subsidiary of Delta Air Lines, Inc., a Delaware
corporation ("Delta"), disclosed in a Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1") dated October 22, 1999, to purchase all the issued and
outstanding Shares not owned by Delta Holdings or its affiliates for $23.50 per
Share (such amount, or any greater amount per Share paid pursuant to the Offer,
being hereinafter referred to as the "Share Amount"), 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 the related Letter of
Transmittal (which together constitute the "Offer"). According to the Offer to
Purchase, immediately prior to making the Offer, Delta Holdings beneficially
owned 21,072,655 shares, constituting approximately 22.06% of the outstanding
Shares.
Kentucky Sub, Delta Holdings and Delta filed a Rule 13e-3 Transaction
Statement on October 22, 1999. The consummation of the Offer is conditioned on,
among other things, acquiring at least that number of Shares (the "Minimum
Number") which, when taken together with the Shares already owned by Delta and
its affiliates, would constitute at least two-thirds of the then issued and
outstanding Shares on a fully diluted basis, and at least the Minimum Number of
Shares being validly tendered and not withdrawn in 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 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 $23.50
per Share, without interest (the "Merger Consideration").
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. The
Merger is not conditioned on Delta or Kentucky Sub 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 not 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.
<PAGE> 3
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.
The Merger Agreement, copy of which is filed as Exhibit (c)(1) hereto, is
summarized in the Offer to Purchase under the captions "INTRODUCTION" and
"SPECIAL FACTORS -- Merger Agreement" and is incorporated herein by reference.
According to the Offer to Purchase, the principal executive offices of
Kentucky Sub and Delta are located at Hartsfield Atlanta International Airport,
1030 Delta Boulevard, Atlanta, Georgia 30320. The principal executive offices of
Delta Holdings are located at 1105 North Market Street, Suite 1300, Wilmington,
Delaware 19801.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of Comair, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above, which information is incorporated
herein by reference.
(b)(1) Certain contracts, agreements, arrangements or understandings
between Comair or its affiliates and certain of its executive officers,
directors or affiliates are described below. In addition, Comair has entered
into certain employment agreements, termination of employment and change in
control arrangements with its executive officers, directors and affiliates, as
described in the Information Statement pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder (the "Information
Statement"), which is attached to this Schedule 14D-9 as Annex I and is
incorporated herein by reference.
1. 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 the
employment agreements.
In addition, upon a change of 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 prepaid 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
2
<PAGE> 4
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) and are incorporated herein by reference.
2. 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, 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), and are incorporated herein
by reference.
3. Vice Presidents -- Employment Agreements
Effective August 10, 1999, 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.
3
<PAGE> 5
4. 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 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), 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 and conducting
discussions with Delta with respect to the renewal of the Delta Connection
Agreement. The Board designated Pete Forster to assist management in this
process. Mr. Forster has been paid $403,000 by Comair for services rendered to
Comair in evaluating and negotiating these strategic alternatives.
5. 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)(14), and is incorporated herein by
reference.
6. 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 aceptance of Shares for payment in the Offer
will constitute a Change in Control for purposes of the Consulting Agreement.
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), and are incorporated
herein by reference.
4
<PAGE> 6
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 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) and is
incorporated herein by reference.
(b)(2) Certain contracts, agreements, arrangements or understandings
between Comair or its affiliates and Kentucky Sub or any of its affiliates are
described below.
1. Marketing and Code Sharing Arrangements Between Comair and Delta
Comair has operated in Cincinnati, Ohio since 1984 and in Orlando, Florida
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.
In connection with the Offer, 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
substantially 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 a 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 $625.4 million and
$725.9 million in Comair's fiscal years ended March 31, 1998 and 1999,
respectively, representing substantially all of Comair's revenues. 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.
A copy of the Delta Connection Agreement is filed as Exhibit (c)(19) to
this Schedule 14D-9 and is incorporated herein by reference, and the foregoing
summary is qualified in its entirety by reference thereto.
2. Delta Ownership of Shares; Stock Purchase 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 Purchase 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 which, as a result of stock
splits and Share repurchases by Comair, represents approximately a 22.06% of the
outstanding Shares as of October 17, 1999.
5
<PAGE> 7
On December 27, 1989, Delta assigned and transferred to Delta Holdings all
of the Shares then owned by Delta.
The Stock Purchase 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 directors (the "Board" or the "Board of Directors") of one
designee of Delta 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 Purchase 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 Purchase 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 outstanding Shares. Comair consented to the Offer and the Merger in the
Merger Agreement. In addition, under the Stock Purchase 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 the close
of business on 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.
A copy of the Stock Purchase Agreement is filed as Exhibit (c)(20) to this
Schedule 14D-9 and is incorporated herein by reference, and the foregoing
summary is qualified in its entirety by reference thereto.
3. 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. The
standstill provision generally provides that until September 29, 2000, Delta
will not: (i) acquire any Shares if the effect of such acquisition would be to
increase the aggregate ownership of the Shares by Delta or its affiliates to
greater than 25% of all the Shares then outstanding, (ii) make, or in any way
participate in, any "solicitation" of "proxies" to vote, or seek to advise any
person with respect to the voting of Shares, (iii) make any public announcement
with respect to, or submit a proposal for, or offer of, any extraordinary
transaction involving Comair or any substantial portion of its assets, (iv)
form, join or in any way participate in a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, in connection with any of the foregoing,
or (v) request Comair to amend or waive any provision of the foregoing.
A copy of the Confidentiality Agreement is filed as Exhibit (c)(21) to this
Schedule 14D-9 and incorporated herein by reference, and the foregoing summary
is qualified in its entirety by reference thereto.
4. Indemnification of Directors and Officers
Comair is a Kentucky corporation. Pursuant to Section 271B.8-500 to 580 of
the KBCA, except as described below, a corporation may indemnify an individual
made a party to a proceeding because he is or was a director, officer, employee
or agent of the corporation against liability incurred in the proceeding if (i)
he conducted himself in good faith, (ii) he reasonably believed, in the case of
conduct in his official capacity with the corporation, that his conduct was in
its best interests, and in all other cases, that his conduct was at least not
opposed to its best interests and (iii) in the case of any criminal proceeding,
he had no reasonable cause to believe his conduct was unlawful. A corporation
may not indemnify a director, officer, employee or agent of
6
<PAGE> 8
the corporation (i) in connection with a proceeding by or in the right of the
corporation in which the director, officer, employee or agent of the corporation
was adjudged liable to the corporation, or (ii) in connection with any other
proceeding charging improper personal benefit to him, whether or not involving
action in his official capacity, in which he was adjudged liable. In addition, a
corporation shall indemnify a director or officer who was wholly successful, on
the merits or otherwise, in the defense of any proceeding to which he was a
party because he is or was a director or officer of the corporation against
reasonable expenses incurred by him in connection with the proceeding.
Pursuant to Section 271B.8-550 of the KBCA, a corporation shall not
indemnify a director unless authorized in the specific case after a
determination has been made that indemnification of the director is permissible
in the circumstances because he has met the standard of conduct set forth above,
which determination shall be made: (i) by the board of directors by majority
vote of a quorum consisting of directors not at the time parties to the
proceeding, (ii) if a quorum cannot be obtained by majority vote of a committee
duly designated by the board of directors (in which designation directors who
are parties may participate), consisting solely of two or more directors not at
the time parties to the proceeding, (iii) by special legal counsel, or (iv) by
the shareholders.
Pursuant to Comair's By-laws, to the full extent permitted by the KBCA,
Comair shall indemnify any person made or threatened to be made a party to any
proceeding (whether brought by or in the right of Comair or otherwise) by reason
of the fact that he or she is or was a director or officer of the Corporation,
or is or was serving at the request of Comair as a director or officer of
another corporation, against judgments, penalties, fines, settlements and
reasonable expenses (including attorneys' fees) actually incurred by him or her
in connection with such proceeding. In addition, the Board of Directors may, at
any time, approve indemnification of any other person which Comair has the power
to indemnify. The indemnification shall not be deemed exclusive of any other
rights to which a person may be entitled as a matter of law or by contract or by
vote of the board of directors or the shareholders. Comair may purchase and
maintain indemnification insurance for any person to the extent provided by
applicable law.
Pursuant to the Merger Agreement, 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 the Effective Time to the extent provided
under the Articles of Incorporation and By-laws of Comair in effect October 17,
1999 and previously provided to Delta. In addition, 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 the date hereof;
provided that in satisfying its obligation, 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.
5. The Merger Agreement
The Merger Agreement, a copy which has been filed as Exhibit (c)(1) hereto,
is summarized in the Offer to Purchase under the caption "INTRODUCTION" and
"SPECIAL FACTORS -- MERGER AGREEMENT" and is incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS
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
7
<PAGE> 9
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, TENDER THEIR SHARES PURSUANT TO THE OFFER AND
APPROVE AND ADOPT THE MERGER AGREEMENT.
A copy of a letter to Comair's shareholders is filed as Exhibit (a)(1) to
this Schedule 14D-9 and is incorporated herein by reference.
(B) BACKGROUND OF THE MERGER AND THE OFFER; REASONS FOR THE RECOMMENDATION
1. Background of the Merger and the Offer
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 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
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.
8
<PAGE> 10
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 need to be appropriate for Delta's and Comair's
respective advisors to begin to discuss how to proceed with respect to exploring
the viability of
9
<PAGE> 11
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.
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 significantly 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's 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 the $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.
10
<PAGE> 12
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 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.
2. Reasons for the Board's Recommendation
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 Board considered a number of factors,
including, but not limited to, the following:
(i) The familiarity of the 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
11
<PAGE> 13
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 the
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 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) (a copy of such opinion
setting forth the assumptions made and matters considered and limitations
set forth by Morgan Stanley is included as Exhibit (a)(2) to this Schedule
14D-9 and shareholders are urged to read such opinion in its entirety);
(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's
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 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
Comair Board may have given different weights to different factors. In light of
the nature of Comair's business, the Comair Board did not deem net book value or
liquidation value to be relevant indicators of the value of Shares.
3. Certain Projections for Comair
The following sets forth certain financial information and projections for
Comair for the fiscal years ending March 31, 2000 through 2003. Due to the
anticipated revenue reallocation and cost sharing
12
<PAGE> 14
arrangements proposed by Delta as part of the negotiations for the renewal of
the Delta Connection Agreement between Comair and Delta, Comair developed its
financial projections to reflect Comair management's best estimate of certain
potential outcomes and the impact of those outcomes on Comair's expected future
financial performance. Comair management provided revised projections for four
potential outcomes: (i) the initial proposal made by Delta for the new operating
agreement (the "Initial Delta Proposal"), (ii) the hypothetical intended to
represent a scenario between the Initial Delta Proposal and the Comair Proposal
(as defined below) (the "Intermediate Proposal"), (iii) the last Comair proposal
for the new operating agreement (the "Comair Proposal") and (iv) a scenario
which represented no ongoing relationship with Delta and the pursuit of certain
other alternatives, including code-sharing arrangements with other carriers and
other commercial arrangements (the "Alternative Business Plan") (these
alternatives collectively, the "Revised Projections").
Comair does not in the ordinary course publicly disclose projections as to
future revenues or earnings and the Projections were not prepared with a view to
public disclosure. These projections were not prepared in accordance with
generally accepted accounting principles and Comair's independent accountants
have not examined or compiled any of the following projections or expressed any
conclusion or provided any other form of assurance with respect to such
projections and accordingly assume no responsibility for such Projections. The
projections were delivered to Morgan Stanley solely in connection with their due
diligence investigation of Comair in order for them to prepare the financial
analysis described below in connection with the Offer and the Merger. The
projections were not prepared with a view to compliance with the guidelines
established by the American Institute of Certified Public Accountants regarding
projections, which would require more complete presentation of data than as
shown below.
<TABLE>
<CAPTION>
TOTAL REVENUES (IN MILLIONS)
--------------------------------
2000 2001 2002 2003
----- ------ ------ ------
<S> <C> <C> <C> <C>
Comair Proposal........................................ $ 894 $1,021 $1,208 $1,412
Intermediate Proposal.................................. $ 884 $ 924 $1,117 $1,362
Initial Delta Proposal................................. $ 655 $ 753 $ 889 $1,054
Alternative Business Plan.............................. $ 876 $1,017 $1,291 $1,499
</TABLE>
<TABLE>
<CAPTION>
EBIT (IN MILLIONS)
--------------------------------
2000 2001 2002 2003
----- ------ ------ ------
<S> <C> <C> <C> <C>
Comair Proposal........................................ $ 235 $ 260 $ 303 $ 331
Intermediate Proposal.................................. $ 230 $ 142 $ 172 $ 208
Initial Delta Proposal................................. $ 95 $ 107 $ 124 $ 142
Alternative Business Plan.............................. $ 159 $ 128 $ 149 $ 202
</TABLE>
<TABLE>
<CAPTION>
EARNINGS PER SHARE
--------------------------------
2000 2001 2002 2003
----- ------ ------ ------
<S> <C> <C> <C> <C>
Comair Proposal........................................ $1.57 $ 1.74 $ 2.06 $ 2.28
Intermediate Proposal.................................. $1.50 $ 0.92 $ 1.10 $ 1.34
Initial Delta Proposal................................. $0.66 $ 0.73 $ 0.86 $ 0.99
Alternative Business Plan.............................. $1.08 $ 0.86 $ 1.00 $ 1.36
</TABLE>
4. Opinion of Morgan Stanley to the 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
13
<PAGE> 15
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 (A)(2) TO THIS SCHEDULE 14D-9 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 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-
14
<PAGE> 16
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.; Sky
West, 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.
REVISED PROJECTIONS VERSUS PROFITABILITY OF COMPARABLE PUBLIC COMPANIES
<TABLE>
<CAPTION>
COMPARABLE COMPANIES VS. COMPARABLE COMPANIES VS.
COMPANIES COMAIR BLENDED 2001 MARGIN COMAIR BLENDED 2003 MARGIN
- --------- -------------------------- --------------------------
<S> <C> <C>
Comair Proposal........................ 25.5% 23.5%
Initial Delta Proposal................. 14.2% 13.5%
Intermediate Proposal.................. 15.4% 15.2%
Alternative Business Plan.............. 12.6% 13.5%
Atlantic Coast Airlines Holdings,
Inc.(1).............................. 16.7% 16.7%
Mesa Air Group, Inc.(1)................ 8.7% 8.7%
Sky West, Inc.(1)...................... 17.0% 17.0%
Mesaba Holdings, Inc.(1)............... 10.2% 10.2%
</TABLE>
- ---------------
(1) Margins reflect latest four quarters of publicly available information.
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
reviewed for purposes of 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 earning 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>
<CAPTION>
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% 0.61x
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 share values as follows:
TRADING VALUATION
<TABLE>
<CAPTION>
EQUITY VALUE
----------------------------------
MULTIPLE AGGREGATE
RANGE (IN MILLIONS) 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
Initial Delta 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
</TABLE>
- ---------------
(1) Based on Management Projections.
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
15
<PAGE> 17
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 Initial Delta 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 in the financial markets in
general. Mathematical analyses, such as determining the average or median, is
not in itself a meaningful method of using the Comparable Public Companies data.
DISCOUNTED STOCK PRICE ANALYSIS(2)
<TABLE>
<CAPTION>
EQUITY VALUE
---------------------------------
MULTIPLE AGGREGATE
RANGE (IN MILLIONS) PER SHARE
2003 ---------- --------------- ---------------
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
Initial Delta 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
</TABLE>
- ---------------
(1) Based on Management Projections.
(2) Pro Forma 2003 share price discounted at 13.0% to 15.0%.
PRECEDENT TRANSACTION PREMIUMS ANALYSIS. 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 for purposes of an analysis of premiums
paid. 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 76 "going
private" transactions during the past five years was 37.4% 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:
PRECEDENT PREMIUMS PAID
<TABLE>
<CAPTION>
EQUITY VALUE
---------------------------------------------
PREMIUM RANGE AGGREGATE (IN MILLIONS) 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
Initial Delta 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
</TABLE>
- ---------------
(1) Implied trading valuation price.
PRECEDENT TRANSACTION MULTIPLES ANALYSIS. Using publicly available
information, Morgan Stanley performed an analysis of the precedent acquisition
of ASA Holdings, Inc. by Delta. Applying the multiples of earnings paid in this
transaction to the expected earnings in the Initial Delta Proposal, the Adjusted
Delta
16
<PAGE> 18
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 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:
DISCOUNTED CASH FLOW ANALYSIS(1)
<TABLE>
<CAPTION>
EQUITY VALUE
---------------------------------
MULTIPLE AGGREGATE (IN
WACC RANGE MILLIONS) 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
Initial Delta 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
</TABLE>
- ---------------
(1) Based on discount rates of 11.0% to 13.0%.
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 draft of 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 Board. The
analyses do not purport to be appraisals or to reflect the prices at which
Comair might actually be sold.
17
<PAGE> 19
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.
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.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Comair has retained Morgan Stanley as Comair's financial advisor in
connection with the evaluation of and response to the Offer, the Merger and
other matters arising in connection therewith. Pursuant to a letter agreement,
dated September 23, 1999 (the "Morgan Stanley Letter Agreement"), Comair
retained Morgan Stanley to provide Comair with financial advice and assistance
in connection with the Offer and the Merger, including advice and assistance
with respect to defining objectives, performing valuation analysis, and
structuring, planning and negotiating the proposed Merger.
18
<PAGE> 20
Pursuant to the Morgan Stanley Letter Agreement, 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 against certain
liabilities related to, arising out of, or in connection with, the engagement of
Morgan Stanley by Comair.
Morgan Stanley's services to be rendered pursuant to the Morgan Stanley
Letter Agreement may be terminated with or without cause by Comair or by Morgan
Stanley at any time and without liability or continuing obligation to Comair or
to Morgan Stanley (except for any compensation earned and expenses incurred by
Morgan Stanley up to the date of termination and except, in the case of
termination by Comair, for Morgan Stanley's right to fees pursuant to the Morgan
Stanley Letter Agreement for any transaction effected within two years of such
termination) and provided that the indemnity provisions will remain operative
regardless of any such termination.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Except as set forth in the following sentences, no transactions in the
Shares have been effected during the past 60 days by Comair or, to the best of
Comair's knowledge, by any executive officer, director, affiliate or subsidiary
of Comair 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 the trusts. Mr.
Castellini has no control over the investment decisions or the management of
such trusts.
(b) To the best of Comair's knowledge, all of Comair's executive officers,
directors, affiliates and subsidiaries currently intend to tender, pursuant to
the Offer, all Shares held of record or beneficially owned by such persons,
subject to and consistent with applicable securities laws and any fiduciary
obligations of such person.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as described in Items 3 and 4 above, Comair is not engaged in
any negotiation in response to the Offer which relates to or would result in (i)
an extraordinary transaction, such as a merger or reorganization, involving
Comair or any of its subsidiaries; (ii) a purchase, sale or transfer of a
material amount of assets by Comair or any of its subsidiaries; (iii) a tender
offer for or other acquisition of securities by or of Comair; or (iv) any
material change in the present capitalization or dividend policy of Comair.
(b) Except as described in Items 3 or 4 above, there are no transactions,
board resolutions, agreements in principle or signed contracts in response to
the Offer which relate to or would result in one or more of the events referred
to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The Information Statement attached hereto as Annex I is being furnished in
connection with the contemplated designation by Kentucky Sub, pursuant to the
Merger Agreement, of certain persons to be appointed to the Board of Directors
of Comair other than at a meeting of Comair's shareholders, following the
purchase by Kentucky Sub of the number of Shares pursuant to the Offer necessary
to satisfy the Minimum Condition.
On or about October 19, 1999, an action styled Barkley v. Comair Holdings,
Inc., et al., No. 99 C 106214, was commenced in the Jefferson Circuit Court,
Commonwealth of Kentucky, by an individual who alleges that he is a citizen of
Florida and held Shares of Comair. The complaint in the Barkley action names as
defendants Comair, the members of the Board and Delta, and seeks to proceed on
behalf of a purported class
19
<PAGE> 21
of Comair common shareholders other than the defendants. The complaint generally
alleges that the members of the Board breached their fiduciary duties to Comair
shareholders by agreeing to allegedly inadequate consideration in the Merger
Agreement, that certain of the members of the Board breached their fiduciary
duties and 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 Comair shares of Comair common stock. The complaint
seeks preliminary and permanent injunctive relief against the Offer and the
Merger, rescission of the Merger Agreement, imposition of a constructive trust,
monetary damages in an unspecified amount and plaintiffs' 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, County of Nassau, 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 substantially similar to the allegations in the
Barkley complaint, and also alleges that Delta breached fiduciary duties it owed
directly to Comair shareholders. The Byrnes complaint seeks injunctive and/or
rescissory relief against the Transaction, monetary damages in an unspecified
amount and plaintiffs' costs and attorneys' fees.
Defendants believe that the allegations of the Barkley and Byrnes
complaints are without merit and intend to defend against them vigorously.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C> <C>
*Exhibit(a)(1) -- Letter to shareholders of Comair, dated October 22, 1999.
Exhibit(a)(2) -- Morgan Stanley Opinion Letter, dated October 16, 1999.
Exhibit(a)(3) -- Press Release issued by Comair on October 18, 1999.
Exhibit(c)(1) -- Agreement and Plan of Merger, dated October 17, 1999, among
Comair, Delta and Kentucky Sub. (Incorporated by reference
to Amendment No. 3 Schedule 13D filed by Delta on October
18, 1999).
Exhibit(c)(2) -- Restated Employment Agreement of David R. Mueller, dated
August 10, 1999.
Exhibit(c)(3) -- Restated Employment Agreement of David A. Siebenburgen,
dated August 10, 1999.
Exhibit(c)(4) -- Employment Agreement of Charles E. Curran, dated August 10,
1999.
Exhibit(c)(5) -- Employment Agreement of K. Michael Stuart, dated August 10,
1999.
Exhibit(c)(6) -- Employment Agreement of Randy D. Rademacher, dated August
10, 1999.
Exhibit(c)(7) -- Employment Agreement of Linda E. Noble, dated August 10,
1999.
Exhibit(c)(8) -- Non-Employee Director Agreement of Peter H. Forster, dated
August 10, 1999.
Exhibit(c)(9) -- Non-Employee Director Agreement of John A. Haas, dated
August 10, 1999.
Exhibit(c)(10) -- Non-Employee Director Agreement of Gerald L. Wolken, dated
August 10, 1999.
Exhibit(c)(11) -- Non-Employee Director Agreement of Robert H. Castellini,
dated August 10, 1999.
Exhibit(c)(12) -- Non-Employee Director Agreement of Christopher J. Murphy,
III, dated August 10, 1999.
Exhibit(c)(13) -- Non-Employee Director Agreement of Raymond A. Mueller, dated
August 10, 1999.
Exhibit(c)(14) -- Consulting Agreement with Raymond A. Mueller, dated December
23, 1983, amended June 5, 1990. (Incorporated by reference
to Exhibit 10.11 of the Form 10-K for the fiscal year ended
March 31, 1999).
Exhibit(c)(15) -- 1990 Employee Stock Option Plan, amended May 18, 1999.
(Amendment incorporated by reference to Exhibit 10.5.1 of
the Form 10-K for the fiscal year ended on March 31, 1999).
Exhibit(c)(16) -- 1992 Director's Stock Option Plan, amended May 18, 1999.
(Amendment incorporated by reference to Exhibit 10.6.1 of
the Form 10-K for the fiscal year ended on March 31, 1999).
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C> <C>
Exhibit(c)(17) -- 1998 Stock Option Plan, amended May 18, 1999. (Incorporated
by reference to a Form S-8 dated October 15, 1998)
(Amendment incorporated by reference to Exhibit 10.5.1 of
the Form 10-K for the fiscal year ended on March 31, 1999).
Exhibit(c)(18) -- Deferred Incentive Compensation Plan, as amended.
(Incorporated by reference to Exhibit 10.7 to the Form 10-K
for the fiscal year ended March 31, 1996) (four amendments
incorporated by reference to Exhibits 10.7.1, 10.7.2, 10.7.3
and 10.7.4 of the Form 10-K for the fiscal year ended on
March 31, 1999).
Exhibit(c)(19) -- Delta Connection Agreement, dated October 1, 1989, between
Comair and Delta.
Exhibit(c)(20) -- Stock Purchase Agreement, dated June 11, 1986, between
Comair and Delta. (Incorporated by reference to the Schedule
14D-1 filed by Kentucky Sub on October 22, 1999).
Exhibit(c)(21) -- Confidentiality Agreement, dated September 29, 1999, between
Comair and Delta.
</TABLE>
- ---------------
* Included with Schedule 14D-9 mailed to shareholders of Comair.
21
<PAGE> 23
SIGNATURE
After reasonable 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.
Comair Holdings, Inc.
By: /s/ RANDY D. RADEMACHER
--------------------------------------
Name: Randy D. Rademacher
Title: Senior Vice President
Finance and
Chief Financial Officer
Dated: October 22, 1999
22
<PAGE> 24
ANNEX I
COMAIR HOLDINGS, INC.
P.O. BOX 75021
CINCINNATI, OHIO 45275
---------------------------------
INFORMATION STATEMENT PURSUANT
TO SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
---------------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S SHAREHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
---------------------------------
This Information Statement is being mailed on or about October 22, 1999 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Comair Holdings, Inc., a Kentucky corporation ("Comair").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Schedule 14D-9. You are receiving this Information Statement in
connection with the designation by Delta Air Lines, Inc., a Delaware corporation
("Delta"), of persons (the "Delta Designees") to the Board of Directors of
Comair (the "Board"). Such designation is to be made pursuant to an Agreement
and Plan of Merger dated as of October 17, 1999 (the "Merger Agreement") among
Comair, Delta and Kentucky Sub, Inc., a Kentucky corporation and an indirect,
wholly owned subsidiary of Delta ("Kentucky Sub").
Pursuant to the Merger Agreement, among other things, Kentucky Sub has
agreed to commence a cash tender offer (the "Offer") on or before October 22,
1999 to purchase all of the issued and outstanding shares of common stock, no
par value, of Comair (the "Shares"), at a price of $23.50 per Share (such
amount, or any greater amount per Share paid pursuant to the Offer being
hereinafter referred to as the "Per Share Amount"), net to the seller in cash.
The Offer is scheduled to expire at 12:00 Midnight, New York City time, on
Friday, November 19, 1999, unless extended pursuant to the terms of the Merger
Agreement. The Offer is subject to, among other things, the condition that
immediately prior to the expiration of the Offer there shall have been validly
tendered and not withdrawn a number of Shares which, together with the Shares
then owned by Delta and its affiliates, represents at least two-thirds of the
Shares then outstanding on a fully diluted basis (the "Minimum Condition").
The Merger Agreement also provides for the merger (the "Merger") of
Kentucky Sub with and into Comair as soon as practicable after satisfaction or,
to the extent permitted in the Merger Agreement, waiver of all conditions of the
Merger. Following the consummation of the Merger (the "Effective Time"), Comair
will be the surviving corporation (the "Surviving Company") and an indirect
wholly owned subsidiary of Delta. In the Merger, each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held by
Comair as treasury stock or by Delta or its affiliates, all of which will be
canceled and no payment made with respect thereto, and other than Shares, if
any, held by shareholders who have properly exercised appraisal rights in
accordance with Kentucky law), shall be canceled and shall be converted into the
right to receive the Per Share Amount in cash, without interest (the "Merger
Consideration"). In the Merger, each option to purchase Shares under each of
Comair's (x) 1990 Stock Option Plan, (y) the 1992 Directors' Stock Option Plan
and (z) the 1998 Stock Option Plan (the "Company Stock Option Plans"), that is
vested and
<PAGE> 25
exercisable (including the options that become vested and exercisable by their
terms as a result of the Merger) shall be canceled and Delta shall pay each
holder in cash for each such option an amount determined by multiplying (A) the
excess, if any, of the Merger Consideration over the applicable exercise price
per share of such option by (B) the number of Shares to which such option
relates.
RIGHT TO DESIGNATE DIRECTORS; THE DELTA DESIGNEES
The Merger Agreement provides that, effective upon the acceptance for
payment pursuant to the Offer of any Shares, Delta will be entitled to designate
the number of directors on the Board, rounded up to the next whole number, that
equals the product of (i) the total number of directors on the Board (giving
effect to the election of any additional directors pursuant to the Merger
Agreement) 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 then outstanding. Comair will, at such time, promptly
take all actions necessary to cause the Delta Designees to be elected or
appointed to the Board, including increasing the size of the Board or seeking
and accepting the resignations of incumbent directors or both. At such times,
Comair shall use its best efforts to cause individuals designated by Delta to
constitute at least the same percentage as such persons represent on the Board
of (A) each committee of the Board and (B) each board of directors (and
committee thereof) of each subsidiary of Comair. Comair shall use its reasonable
best efforts to cause at least two current members of the Board who are not
Affiliated or Associated (as defined under Kentucky law) with Delta or Kentucky
Sub and are not officers or employees of Comair, to remain members of the Board
until the Effective Time.
The terms of the Merger Agreement, a summary of the events leading up to
the Offer and the execution of the Merger Agreement and other information
concerning the Offer and the Merger are contained in the Offer to Purchase and
in the Schedule 14D-9 with respect to the Offer, copies of which are being
delivered to shareholders of Comair contemporaneously herewith. Certain other
documents (including the Merger Agreement) were filed with the Securities and
Exchange Commission (the "SEC") as exhibits to the Schedule 14D-9 and as
exhibits to the Tender Offer Statement on Schedule 14D-1 of Delta and Kentucky
Sub (the "Schedule 14D-1"). The exhibits to the Schedule 14D-9 and the Schedule
14D-1 may be examined at, and copies thereof may be obtained from, the regional
offices of and public and reference facilities maintained by the SEC (except
that the exhibits thereto cannot be obtained from the regional offices of the
SEC) in the manner set forth in the Offer to Purchase. Comair has been informed
that Delta intends to finance the purchase of Shares in the Offer and the Merger
through a new term loan which Delta expects to enter into prior to the
consummation of the Offer.
It is expected that the Delta Designees will assume office promptly
following the purchase by Kentucky Sub of a majority of the outstanding Shares
of common stock on a fully diluted basis pursuant to the terms of the Offer
which purchase cannot be earlier than November 19, 1999 and that, upon assuming
office, the Delta Designees together with the continuing directors of Comair
will thereafter constitute the entire Board.
No action is required by the shareholders of Comair in connection with the
election or appointment of the Delta Designees to the Board. However, Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires the mailing to Comair's shareholders of the information set forth in
this Information Statement prior to a change in a majority of Comair's directors
otherwise than at a meeting of Comair's shareholders.
The information contained in this Information Statement concerning Delta,
Kentucky Sub and the Delta Designees, has been furnished to Comair by such
persons, and Comair assumes no responsibility for the accuracy or completeness
of such information. The Schedule 14D-1 indicates that the principal executive
offices of Delta are located at 1030 Delta Boulevard, Hartsfield Atlanta
International Airport, Atlanta, GA 30320.
2
<PAGE> 26
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
GENERAL
The Shares are the only class of voting securities of Comair outstanding.
Each Share is entitled to one vote. As of October 21, 1999, there were
95,526,431 Shares outstanding. The Board currently consists of eight members
with one vacancy. The Board is divided into three classes, with staggered
three-year terms.
PRINCIPAL SHAREHOLDERS
The following persons are the only shareholders known by Comair to own
beneficially 5% or more of the Shares as of October 21, 1999:
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER AMOUNT OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------ ------------------------------ ----------------
<S> <C> <C>
Delta Air Lines, Inc.......................... 21,072,655(1) 22.06%
1030 Delta Boulevard
Hartsfield International Airport
Atlanta, GA 30320
FMR Corp...................................... 5,711,875(2) 5.98%
82 Devonshire St.
Boston, MA 02109
</TABLE>
- ---------------
(1) Based on 13D Report filed with the Securities and Exchange Commission in
October 1999.
(2) Based on 13G Report filed with the Securities and Exchange Commission in
February 1999.
DIRECTORS AND EXECUTIVE OFFICERS
THE DELTA DESIGNEES
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 proposed director designated by
Delta to serve as directors on the Board following the Offer and Merger. Each of
the proposed directors of Comair is a citizen of the United States.
3
<PAGE> 27
Except as otherwise indicated, the business address of each proposed
director is Delta Air Lines, Inc., 1030 Delta Boulevard, Hartsfield Atlanta
International Airport, Atlanta, GA 30320. Except as otherwise indicated, the
occupation set forth opposite a person's name refers to employment with Delta.
No proposed director beneficially owns any material amount of outstanding
Shares.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
Malcolm B. Armstrong Executive Vice President -- Operations of Delta since
Age 57 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 until June 1995.
Vicki B. Escarra Executive Vice President -- Customer Service of Delta since
Age 47 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 of
Age 49 Delta 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
Edward H. West March 1997, and as Senior Vice President, The Americas, from
Age 33 1991 to 1996. Executive Vice President and Chief Financial
Officer of Delta 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.
</TABLE>
4
<PAGE> 28
CURRENT DIRECTORS
The current directors of Comair are:
<TABLE>
<CAPTION>
NAME, CITIZENSHIP PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
AND CURRENT BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF
- ---------------------------- ---------------------------------------------------------------------------------
<S> <C>
Robert H. Castellini Director since 1989. Mr. Castellini is Chairman of Castellini Company, a
Age 57 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.
Peter H. Forster Director since 1988. Mr. Forster has been affiliated with the Dayton Power and
Age 57 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.
John A. Haas Director since 1990. Mr. Haas was Group Vice President of Ball Corporation from
Age 62 1993 through 1995. He has been 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.
David R. Mueller Mr. Mueller is a founder of Comair and has served as a director since its
Age 46 inception. He served as Chief Operating Officer from the Comair'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.
Raymond A. Mueller Mr. Mueller is a founder of Comair and served as Chairman of the Board until his
Age 77 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.
Christopher J. Murphy Director since 1989. Mr. Murphy is the Chairman, President and Chief Executive
Age 53 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.
David A. Siebenburgen Director since 1988. Mr. Siebenburgen served as Executive Vice President and
Age 51 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.
</TABLE>
5
<PAGE> 29
<TABLE>
<CAPTION>
NAME, CITIZENSHIP PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
AND CURRENT BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF
- ---------------------------- ---------------------------------------------------------------------------------
<S> <C>
Gerald L. Wolken Director since 1989. Mr. Wolken has been Managing Partner of MLE Enterprises
Age 63 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.
</TABLE>
DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP
The table below shows how many Shares each executive officer and director
of Comair owned on May 31, 1999.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
----------------------
NAME AND AGE POSITION AMOUNT PERCENTAGE
------------ -------- ---------------------- ----------
<S> <C> <C> <C>
Raymond A. Mueller(2)................ Director 409,574 (*)
Age 77
Robert H. Castellini(3).............. Director 853,091 (*)
Age 57
Christopher J. Murphy, III(4)........ Director 98,851 (*)
Age 53
Peter H. Forster(5).................. Director 91,133 (*)
Age 57
John A. Haas(6)...................... Director 87,337 (*)
Age 62
Gerald L. Wolken(7).................. Director 58,095 (*)
Age 63
David R. Mueller(8).................. Chairman of the Board, CEO 1,232,164 1.3%
Age 46
David A. Siebenburgen(9)............. President, COO 468,845 (*)
Age 51
K. Michael Stuart(10)................ Sr. VP Aircraft Operations 206,044 (*)
Age 47
Charles E. Curran, III(11)........... Sr. VP Marketing 181,150 (*)
Age 52
Randy D. Rademacher(12).............. Sr. VP Finance, CFO 195,075 (*)
Age 42
Linda E. Noble(13)................... Sr. VP Human Resources and 130,840 (*)
Age 51 Inflight Services
All Executive Officers and Directors
as a group (Twelve Persons) 4,012,199 4.2%
</TABLE>
- ---------------
* Less than 1%
Notes:
(1) 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.
6
<PAGE> 30
(2) 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.
(3) 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, 2876 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.
(4) Includes options for 79,744 Shares exercisable within 60 days of May 31,
1999.
(5) Includes 3,375 Shares held by his spouse and options for 79,744 Shares
exercisable within 60 days of May 31, 1999.
(6) Includes options for 79,744 Shares exercisable within 60 days of May 31,
1999.
(7) Includes options for 56,960 Shares exercisable within 60 days of May 31,
1999.
(8) Includes 48,091 Shares held in a Comair 401(k) Program, 53,692 Shares held
by his children, and 542,412 options for Shares exercisable within 60 days
of May 31, 1999.
(9) Includes 19,146 Shares held in a Comair 401(k) Program and options for
273,239 Shares exercisable within 60 days of May 31, 1999.
(10) Includes 9,256 Shares held in a Comair 401(k) Program, 44,925 Shares held
by his spouse and options for 94,925 Shares exercisable within 60 days of
May 31, 1999.
(11) Includes 1,045 Shares held in a Comair 401(k) Program and options for
95,177 Shares exercisable within 60 days of May 31, 1999.
(12) Includes 7,702 Shares held in a Comair 401(k) Program and options for
155,083 Shares exercisable within 60 days of May 31, 1999.
(13) Includes 5,563 Shares held in a Comair 401(k) Program, 3000 Shares held in
a custodial account and options for 104,100 Shares exercisable within 60
days of May 31, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Delta owns approximately 22% of the Shares. Comair is a designated "Delta
Connection" carrier, operating all 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 flyer mileage. In return for set fees,
Delta handles Comair's reservations and handles flights at some airport
locations. Costs of these various services in fiscal 1999 were approximately
$30,416,000. Accounts payable in Comair's March 31, 1999 financial statements
included approximately $11,272,000 due to Delta for these services.
Approximately 45% of Comair's passengers in fiscal 1999 connected with Delta.
Comair has a lifetime Consulting Agreement with Raymond A. Mueller which
became effective upon his retirement from Comair in 1990. Mr. R. Mueller's
consulting compensation is $150,000 per year. Mr. R. Mueller also received
transportation services and insurance amounting to $24,568 for fiscal 1999.
In 1999, Comair received $108,576 from a company-owned by Mr. Castellini
for aircraft charters. These charges were in the same range as those to
non-affiliated customers.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board met six times last year and took one action in writing. No
director attended fewer than 75% of the meetings of the Board or of any
committee of the Board on which he sits.
The Executive Committee.
The Executive Committee is authorized to perform substantially all of the
functions of the Board between meetings of the Board.
Committee Members: David R. Mueller, Peter H. Forster, and Raymon A.
Mueller (Chairman).
Actions in Writing Last Year: twenty-seven
7
<PAGE> 31
The Audit Committee.
The Audit Committee is responsible for reviewing Comair's internal
accounting operations. It also recommends the employment of independent
accountants and reviews the relationship between Comair and its outside
accountants.
Committee Members: Raymond A. Mueller, Gerald L. Wolken and Christopher J.
Murphy (Chairman).
Meetings Last Year: two
The Finance Committee.
The Finance Committee reviews the investment, dividend and overall capital
structure policies of Comair.
Committee Members: Christopher J. Murphy, David A. Siebenburgen and David
R. Mueller (Chairman).
Meetings Last Year: two
The Compensation Committee.
The Compensation Committee is responsible for establishing compensation
levels for management and administering Comair's Stock Option Plans.
Committee Members: Robert H. Castellini, John A. Haas, and Peter H.
Forster (Chairman).
Meetings Last Year: three
Actions in Writing Last Year: one
Compensation Committee Interlocks and Insider Participation.
None.
DIRECTOR COMPENSATION
Directors who are not employees of Comair receive $20,000 per year and
non-qualified options to purchase 11,392 Shares per year. In addition, each
Director receives $1,500 per year for each committee on which they are a member.
Committee chairmen receive an additional $1,500 annually.
Directors who are employees of Comair are not separately compensated for
serving as Directors.
Raymond A. Mueller and David R. Mueller are father and son. None of the
other directors or executive officers are related.
STOCK OPTIONS
Comair's 1998 and 1990 Stock Option Plans are the principal means by which
long-term incentive compensation is provided for key officers and employees of
Comair, bringing the interests of these persons more closely into tandem with
the interests of shareholders. The Plans are administered by the Compensation
Committee.
Comair's policies on executive compensation are applicable to the Stock
Option Plans, and all decisions regarding the number, pricing, timing and the
recipients of stock option grants are made by the Compensation Committee.
8
<PAGE> 32
EXECUTIVE OFFICERS OF COMAIR WHO ARE NOT DIRECTORS
The following sets forth certain information as to each Executive Officer
of Comair who is not also a Director, including age as of October 21, 1999.
Charles E. Curran, III is 52 years old. He has been Senior Vice President
of Marketing for Comair since 1984. He joined Comair in 1982 as Vice President
of Marketing. Prior to joining Comair, he held positions with Booz, Allen &
Hamilton, Inc., Southern Airways, Inc. and Republic Airlines, Inc.
K. Michael Stuart is 47 years old. He has been Senior Vice President of
Aircraft Operations for Comair since 1986. He joined Comair in 1980 as a Captain
and has held positions as Director of Operations and Vice President of Flight
Operations. In his current position, Mr. Stuart is responsible for the Flight
Operations and Maintenance Departments of Comair.
Randy D. Rademacher is 42 years old. He has been Senior Vice President of
Finance and Chief Financial Officer of Comair since 1993. He joined Comair as
Director of Corporate Finance in 1985 and was named Controller in 1986, and Vice
President of Finance in 1989.
Linda E. Noble is 51 years old. She has been Senior Vice President of Human
Resources for Comair since 1997. She joined Comair in 1983 as Director of
Personnel and was promoted to Vice President of Human Resources in 1984.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
compensation earned by, awarded to or paid to Comair's Chief Executive Officer
and each of the other four most highly compensated executive officers
(collectively, the "Named Executive Officers"), for services rendered to Comair
(the "Summary Compensation Table"):
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ---------------------
NAME AND FISCAL ------------------- SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- ------------------ ------ -------- -------- --------------------- ------------
<S> <C> <C> <C> <C> <C>
David R. Mueller...................... 1999 $525,000 $378,000 225,000 $577,543(1)
Chairman 1998 $500,000 $375,000 225,000 $502,462
Chief Executive Officer 1997 $450,000 $295,110 216,571 $502,432
David A. Siebenburgen................. 1999 $420,000 $302,400 180,000 $427,817(2)
President 1998 $310,000 $193,750 135,000 $402,433
Chief Operating Officer 1997 $290,000 $158,485 87,758 $362,433
K. Michael Stuart..................... 1999 $213,000 $ 89,460 67,500 $152,585(3)
Senior Vice President 1998 $203,000 $ 88,812 67,500 $162,545
Aircraft Operations 1997 $190,000 $ 43,890 42,188 $162,476
Charles E. Curran III................. 1999 $213,000 $ 89,460 67,500 $222,405(4)
Senior Vice President 1998 $203,000 $ 88,812 67,500 $221,269
Marketing 1997 $190,000 $ 72,884 42,188 $221,933
Randy D. Rademacher................... 1999 $205,000 $ 86,100 67,500 $132,569(5)
Senior Vice President 1998 $190,000 $ 83,125 67,500 $132,533
Finance, CFO 1997 $178,000 $ 68,281 42,188 $132,468
</TABLE>
- ---------------
(1) Comprised of $575,000 of contributions by Comair to its Deferred Incentive
Compensation Plan and $2,543 of contributions by Comair to the Comair
Savings and Investment Plan.
(2) Comprised of $425,000 of contributions by Comair to its Deferred Incentive
Compensation Plan and $2,817 of contributions by Comair to the Comair
Savings and Investment Plan.
(3) Comprised of $150,000 of contributions by Comair to its Deferred Incentive
Compensation Plan and $2,585 of contributions by Comair to the Comair
Savings and Investment Plan.
9
<PAGE> 33
(4) Comprised of $220,000 of contributions by Comair to its Deferred Incentive
Compensation Plan and $2,405 of contributions by Comair to the Comair
Savings and Investment Plan.
(5) Comprised of $130,000 of contributions by Comair to its Deferred Incentive
Compensation Plan and $2,569 of contributions by Comair to the Comair
Savings and Investment Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information related to options to purchase
Common Stock of Comair granted to the named executive officers during 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
OF ASSUMED ANNUAL RATES
OF STOCK PRICE
PERCENT OF APPRECIATION
TOTAL OPTIONS EXERCISE FOR OPTION TERM
OPTIONS GRANTED PRICE EXPIRATION ---------------------------
INDIVIDUAL GRANTS GRANTED EMPLOYEES ($ PER SHARE) DATE 5% 10%
----------------- ------- ------------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David R. Mueller............ 225,000 20% $16.500 04/13/08 $2,335,050 $5,916,825
David A. Siebenburgen....... 180,000 16 $16.500 04/13/08 $1,868,040 $4,733,460
Charles E. Curran........... 67,500 6 $16.500 04/13/08 $ 700,515 $1,775,048
K. Michael Stuart........... 67,500 6 $16.500 04/13/08 $ 700,515 $1,775,048
Randy D. Rademacher......... 67,500 6 $16.500 04/13/08 $ 700,515 $1,775,048
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL FISCAL
1999 YEAR-END YEAR-END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David R. Mueller................................ 339,868 586,665 $5,727,878 $6,930,289
David A. Siebenburgen........................... 156,224 361,200 $2,620,637 $3,950,523
Charles E. Curran............................... 46,071 153,520 $ 723,909 $1,730,187
K. Michael Stuart............................... 45,945 153,395 $ 721,362 $1,727,652
Randy D. Rademacher............................. 107,116 203,007 $1,948,783 $2,698,206
</TABLE>
The table above shows the number and value of unexercised stock options at
the end of fiscal 1999. No options were exercised during the last fiscal year by
any of the individuals named in the table.
The dollar values shown are calculated by determining the difference
between the fair market value of Comair's Common Stock on March 31, 1999 and the
exercise price of the options. At the close of trading on March 31, 1999, the
price per share of Comair's Common Stock was $23.625.
MATERIAL CONTRACTS AND AGREEMENTS WITH EXECUTIVE OFFICERS
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
10
<PAGE> 34
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 the employment agreements.
In addition, upon a change of 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 prepaid 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.
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, 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.
Vice Presidents -- Employment Agreements
Effective August 10, 1999, 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.
11
<PAGE> 35
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 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.
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 and conducting
discussions with Delta with respect to the renewal of the Delta Connection
Agreement. The Board designated Pete Forster to assist management in this
process. Mr. Forster has been paid $403,000 by Comair for services rendered to
Comair in evaluating and negotiating these strategic alternatives.
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.
12
<PAGE> 36
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.
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 aceptance of Shares for payment in the Offer
will constitute a Change in Control for purposes of the Consulting Agreement.
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.
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 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.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
Compensation Policies
Comair's policies on executive compensation are designed to encourage and
motivate its executive officers to achieve both short-term and long-term
operating, financial and strategic goals, and thereby build shareholder value on
a steady but aggressive basis. As a result of Comair's overall philosophy,
approximately 20% to 50% of an executive's total compensation depends on the
achievement of their goals. It is also the policy of the Committee to reward
superior corporate performance, recognize individual initiative and achievement,
and assist Comair in attracting and retaining qualified executives.
The Omnibus Budget Reconciliation Act of 1993 provides that compensation in
excess of $1,000,000 per year paid to the Chief Executive Officer of a public
Comair as well as the other executive officers listed in the compensation table
will no longer be deductible unless the compensation is "performance-based" and
approved by the shareholders. The Committee does not believe any action is
required by Comair or its shareholders in order for the compensation paid to its
executive officers to meet the requirements for deductibility at this time.
Compensation Payable to Executive Officers
Base Salaries.
The Compensation Committee believes it is important to maintain executive
salaries at competitive levels, and relies to some extent on comparisons with
other regional companies of similar size.
Base salary levels and salary increases were determined by an evaluation of
Comair's performance and each individual's performance and contribution.
The Chief Executive Officer's salary was determined on this basis.
13
<PAGE> 37
Annual Performance Based Incentives
Annual incentive opportunities establish an effective link between current
compensation and current performance to ensure that executives focus on
objectives that help to increase shareholder value. Performance is defined in
terms of financial, operating and management development goals for which each
executive is responsible, in addition to overall company goals in these areas.
All performance goals, which include pre-tax profits, quality of passenger
service measurements, various unit revenue and cost objectives and operating
goals such as flight completion and on-time percentage, were set by the
Committee at the beginning of the fiscal year. These goals are set each year
based on an operating plan the Committee believes to be challenging in the then
current operating environment. The actual results must meet certain targets
before any annual incentive awards are paid. In making its awards for fiscal
1999, the Committee determined which targets had been met and then awarded
specific bonuses based on its analysis of the achievement of performance goals
as established by the Compensation Committee.
The Chief Executive Officer's bonus was determined on this basis.
LEGAL PROCEEDINGS
On or about October 19, 1999, an action styled Barkley v. Comair Holdings,
Inc., et al., No. 99 C 106214, was commenced in the Jefferson Circuit Court,
Commonwealth of Kentucky, by an individual who alleges that he is a citizen of
Florida and held Shares of Comair. The complaint in the Barkley action names as
defendants Comair, the members of the Board and Delta, and seeks to proceed on
behalf of a purported class of Comair common stockholders other than the
defendants. The complaint generally alleges that the members of the Board
breached their fiduciary duties to Comair shareholders by agreeing to allegedly
inadequate consideration in the Merger Agreement and 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 Comair
Shares. The complaint seeks preliminary and permanent injunctive relief against
the Offer and the Merger, rescission of the Merger Agreement, imposition of a
constructive trust, monetary damages in an unspecified amount and plaintiffs'
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, County of Nassau, on behalf of a purported class
of Comair shareholders other than defendants. The complaint in the Byrnes action
names as defendants Comair, the Board and Delta. The complaint makes allegations
substantially similar to the allegations in the Barkley complaint, and also
alleges that Delta breached fiduciary duties it owed directly to Comair
shareholders. The Byrnes complaint seeks injunctive and/or rescissory relief
against the Transaction, monetary damages in an unspecified amount and
plaintiffs' costs and attorneys' fees.
Defendants believe that the allegations of the Barkley and Byrnes
complaints are without merit and intend to defend against them vigorously.
14
<PAGE> 38
PERFORMANCE GRAPH
The performance graph below compares Comair's cumulative total shareholder
return from March 31, 1994 through March 31, 1999 to that of the NASDAQ
Transportation and the NASDAQ Composite Indices.
The graph assumes that the value of the investment in Comair's Shares and
each index was $100.00 on March 31, 1994 and that all dividends were reinvested.
<TABLE>
<CAPTION>
COMAIR HOLDINGS, INC. NASDAQ TRANSPORTATION
--------------------- NASDAQ COMPOSITE INDEX INDEX (U.S. DOMESTIC
(U.S. DOMESTIC ONLY) ONLY)
---------------------- ---------------------
<S> <C> <C> <C>
Mar-94 100.00 100.00 100.00
Mar-95 82.01 111.25 95.01
Mar-96 251.62 151.06 115.68
Mar-97 228.43 167.83 115.06
Mar-98 442.98 254.43 169.16
Mar-99 596.83 342.44 127.95
</TABLE>
- ---------------
* Assumes $100 invested on March 31, 1994.
** U.S. Domestic Index Only.
15
<PAGE> 39
SECTION 16(A) REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires Comair's
Directors and Executive Officers, and persons who own more than ten percent of a
registered class of Comair's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of Comair. Executive
Officers, Directors and greater than ten percent shareholders are required by
Securities and Exchange Commission regulations to furnish Comair with copies of
all Section 16(a) forms they file.
To Comair's knowledge, based solely on review of the copies of such reports
furnished to Comair, Executive Officers, Directors and greater than ten percent
beneficial owners timely filed all required reports under Section 16(a).
16
<PAGE> 1
EXHIBIT (a)(1)
LETTER TO SHAREHOLDERS OF COMAIR
<PAGE> 2
EXHIBIT (a)(1)
[COMAIR LETTERHEAD]
October 22, 1999
Dear Stockholders:
I am pleased to inform you that, on October 17, 1999, Comair Holdings,
Inc. entered into an Agreement and Plan of Merger with Delta Air Lines, Inc. and
Kentucky Sub, Inc., an indirect, wholly owned subsidiary of Delta, pursuant to
which Kentucky Sub is today commencing a tender offer for all outstanding shares
of Comair's common stock for $23.50 per share in cash. The tender offer is
conditioned upon, among other things, satisfaction of the condition that there
be validly tendered and not withdrawn at least two-thirds of the outstanding
shares of Comair common stock held by stockholders, including Delta and Kentucky
Sub. Following completion of the tender offer, upon the terms and subject to the
conditions of the Merger Agreement, Kentucky Sub will be merged into Comair, and
each share of Comair common stock not tendered in the Offer (other than those
shares held in the Comair's treasury or owned by Delta, its affiliates, or by
any dissenting shareholder) will be converted into the right to receive $23.50
per share in cash, without interest. Upon consummation of these transactions,
Delta will own the entire equity interest in Comair.
YOUR BOARD OF DIRECTORS, HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY AND HAS DETERMINED THAT THE TENDER
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, COMAIR AND
COMAIR'S SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT ALL
COMAIR SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
TENDER OFFER.
In arriving at its recommendations the Board of Directors gave careful
consideration to a number of factors described in the attached
Solicitation/Recommendation Statement on Schedule 14D-9 that is being filed
today with the Securities and Exchange Commission. These factors included the
opinion of Morgan Stanley & Co. Incorporated, financial advisors to Comair, that
the cash consideration of $23.50 per share of common stock to be received by
Comair's shareholders pursuant to the Merger Agreement is fair from a financial
point of view to Comair's shareholders (other than Delta and its affiliates).
Enclosed with this letter is Comair's Schedule 14D-9 and Delta's Offer
to Purchase and related materials, including a Letter of Transmittal for use in
tendering shares. I urge you to read the enclosed materials, including Morgan
Stanley & Co. Incorporated's fairness opinion which is attached to the Schedule
14D-9, carefully.
The management and directors of the Company thank you for the support
you have given Comair.
Sincerely,
/s/ David R. Mueller
-------------------------------
David R. Mueller
Chairman of the Board and
Chief Executive Officer
<PAGE> 1
EXHIBIT (a)(2)
MORGAN STANLEY OPINION LETTER
<PAGE> 2
EXHIBIT (a)(2)
MORGAN STANLEY DEAN WITTER
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000
October 17, 1999
Board of Directors
Comair Holdings, Inc.
P.O. Box 75021
Cincinnati, OH 45275
Members of the Board:
We understand that Comair Holdings, Inc. ("Comair" or the "Company"), Delta Air
Lines, Inc. ("Delta") and Kentucky Sub, Inc., an indirect wholly owned
subsidiary of Delta ("Acquisition Sub"), propose to enter into an Agreement and
Plan of Merger, dated October 17, 1999 (the "Merger Agreement"), which provides,
among other things, for (i) the commencement by Acquisition Sub of a tender
offer (the "Tender Offer") for all outstanding shares of common stock, no par
value, of Comair (the "Common Stock") for $23.50 per share net to the seller in
cash, and (ii) the subsequent merger (the "Merger") of Acquisition Sub with and
into Comair. Pursuant to the Merger, Comair will become an indirect wholly owned
subsidiary of Delta and each outstanding share of Common Stock of Comair, other
than shares held in treasury or held by Delta or any subsidiary of Delta or as
to which dissenters' rights have been perfected, will be converted into the
right to receive $23.50 per share in cash. The terms and conditions of the
Tender Offer and the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be received by
the holders of shares of Common Stock pursuant to the Merger Agreement is fair
from a financial point of view to such holders (other than Delta and its
affiliates).
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and
other information of the Company;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Company prepared by
the management of the Company;
(iii) reviewed certain financial projections prepared by the management
of the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company, including the Company's
expected future relationship with Delta, with senior executives
of the Company;
(v) reviewed the reported prices and trading activity for the Common
Stock;
<PAGE> 3
MORGAN STANLEY DEAN WITTER
(vi) compared the financial performance of the Company and the prices
and trading activity of the Common Stock 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 representa-
tives of the Company and Delta and their financial and legal
advisors;
(ix) reviewed the Merger Agreement and certain related documents; and
(x) performed such other analyses and considered such other factors
as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. We
have assumed that the Tender Offer and the Merger will be consummated on the
terms set forth in the Merger Agreement. We have not made any independent
valuation or appraisal of the assets or liabilities of the Company, nor have be
been furnished with any such appraisals. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party, nor did we have discussions with any party
other than Delta with respect to the acquisition of the Company or any of its
assets.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In
addition, Morgan Stanley provides no advice or recommendation as to whether or
not holders of shares of Common Stock should participate in the Tender Offer. In
the past, Morgan Stanley has provided financial advisor and financing services
for Delta and has received fees for the rendering of these services.
Based on the foregoing we are of the opinion on the date hereof that the
consideration to be received by the holders of shares of Common Stock pursuant
to the Merger Agreement is fair from a financial point of view to such holders
(other than Delta and its affiliates).
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Mark D. Eichorn
---------------------------------------
Mark D. Eichorn
Principal
<PAGE> 1
EXHIBIT (a)(3)
PRESS RELEASE
<PAGE> 2
EXHIBIT (a)(3)
COMAIR ANNOUNCES AGREEMENT WITH DELTA AIR LINES FOR
ACQUISITION OF COMAIR HOLDINGS INC.
CINCINNATI, Ohio, October 18, 1999 - In an agreement that will capitalize on
COMAIR's expertise in operating regional jets profitably, COMAIR Holdings, Inc.
(NASDAQ/NMS:COMR), the parent company of COMAIR Inc., today announced that it
has reached a definitive agreement with Delta Air Lines in which Delta will
acquire COMAIR Holdings for a total consideration of approximately $1.8 billion
or $23.50 a common share.
Under terms of the agreement, COMAIR will be operated as a separate subsidiary
of Delta and its headquarters will remain at Cincinnati/Northern Kentucky
International Airport.
David R. Mueller, chairman of the board and chief executive officer of COMAIR
Holdings, Inc., said: "The 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. This
transaction serves the interests of our shareholders and increases the growth
opportunities for our employees and the communities we serve."
COMAIR and Delta began their relationship in 1984 with a code-share marketing
agreement through which COMAIR flies customers from cities in the Midwest and
Florida through both COMAIR's and Delta's hubs in Cincinnati, Ohio and Orlando,
Florida.
Leo F. Mullin, Delta president and chief executive officer, said: "This
transaction is a unique growth opportunity for Delta and COMAIR. COMAIR is a
very successful regional airline with strong and respected leadership and an
outstanding record of financial and operational performance. That has
tremendous value to our entire system as we build for the future. This
acquisition continues Delta's strategy to strengthen its nationwide Delta
Connection carrier network with an emphasis on introducing regional jets."
Under terms of the agreement, a Delta subsidiary will make a tender offer to
purchase all outstanding shares of common stock of COMAIR Holdings for $23.50
per share in cash. COMAIR Holdings has outstanding 95.5 million shares of
common stock. Delta currently owns 21.1 million of these shares, or
approximately 22 percent of the outstanding shares. The tender offer will
commence no later than Friday, October 22. Following the completion of the
tender offer, which is subject to customary conditions, the Delta subsidiary
will merge into COMAIR Holdings. When the merger becomes effective, each
outstanding share of COMAIR Holdings will be converted into the right to
receive $23.50 in cash. At that time, COMAIR Holdings and COMAIR will become
wholly owned subsidiaries of Delta.
Following the closing of the transaction, David A. Siebenburgen, 52, president
and chief operating officer of COMAIR Holdings, Inc. and president, chief
operating officer and chief executive officer of COMAIR, will lead the national
Delta Connection network with direct responsibility for COMAIR and Atlantic
Southeast Airlines (ASA) operations. ASA is a wholly owned subsidiary of Delta,
which serves customers primarily from cities in the Southeast and Texas.
Mr. Siebenburgen said: "Teaming with Delta through this acquisition enables us
to maximize our expertise in operating regional jets profitably. This agreement
creates outstanding
<PAGE> 3
opportunities for our employees who are the foundation of our success. We're
excited to build on our great relationship with Delta and strengthen this
premier carrier's competitive position."
Mr. Mueller, 46, will remain with COMAIR Holdings through the transition period.
After that, he will serve as an advisor to Delta and as Chairman of the Delta
Connection Carrier Advisory Committee.
Delta expects the current COMAIR operating management will remain an important
part of the COMAIR and Delta Connection team. This transaction will result in
minimal, if any, job reductions. COMAIR will retain its separate workforce and
salary and benefits structure. There will be no integration of workforces or
seniority lists with Delta. COMAIR's labor agreements remain in place.
Founded in 1977, COMAIR pioneered the use of regional jets in 1993, a move which
revolutionized the industry. Today, the airline serves more than 6.4 million
customers annually with the largest fleet of regional jets in the world. Total
revenue in fiscal 1999 was $763 million.
COMAIR currently operates 82, 50-seat Bombardier regional jets with firm orders
for 48 more, including 20 new 70-passenger jets which the airline will begin
accepting in 2001. COMAIR continues to accept delivery of at least one new
50-seat regional jet per month, as it has since 1993. In addition to the current
fleet and firm orders totaling 130 aircraft, COMAIR has options with Bombardier
Aerospace of Canada for an additional 115 aircraft. If all options are
exercised, COMAIR could expand its fleet to a total of 245 regional jets.
COMAIR, named the "Best-Managed Regional Airline" for 1999 by Aviation Week &
Space Technology magazine, employs 4,400 aviation professionals. The airline
offers more than 700 daily departures to 88 cities in 31 states and three
countries through its hubs at Cincinnati/Northern Kentucky International Airport
and Orlando International Airport.
Delta, named Airline of the Year by Air Transport World magazine and
"Best-Managed Major Airline" for 1999 by Aviation Week & Space Technology
magazine, is the world's most flown carrier. More than 105 million passengers
traveled on Delta in 1998. Delta, Delta Express, the Delta Shuttle, the Delta
Connection carriers and Delta's Worldwide Partners operate 5,370 flights each
day to 352 cities in 59 countries.
CONTACT: CORPORATE COMMUNICATIONS - 800-3611-2608
###
<PAGE> 1
EXHIBIT (c)(2)
RESTATED EMPLOYMENT AGREEMENT
OF DAVID R. MUELLER
<PAGE> 2
EXHIBIT (c)(2)
RESTATED EMPLOYMENT AGREEMENT
THIS RESTATED EMPLOYMENT AGREEMENT ("Agreement") is dated as of August
10, 1999 by and between COMAIR HOLDINGS, INC. a Kentucky corporation ("Company")
and DAVID R. MUELLER ("Executive").
W I T N E S S E T H:
WHEREAS, the Company and Executive entered into an Employment Agreement
dated December 23, 1983 as restated by Restated Employment Agreement dated as of
June l, 1988, and further restated by Restated Employment Agreement dated as of
April 1, 1998, as amended by Amendment to Restated Employment Agreement dated as
of May 18, 1999, which they desire to amend and restate; and
WHEREAS, Company desires to continue to employ Executive as Chairman
and Chief Executive Officer, and Executive desires to continue to perform such
duties;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Employment. The Company does hereby continue to employ
Executive, subject to the terms and conditions hereinafter set forth, as an
executive employee and officer of the Company with the title of Chairman of the
Board and Chief Executive Officer or such other executive title or titles as
determined by the Board of Directors of Company from time to time, and Executive
accepts such employment upon the terms and conditions herein set forth.
2. Term. The term of this Agreement shall be for three (3) years,
which shall commence on August 1, 1999 and shall terminate on July 31, 2002,
unless sooner terminated in accordance with the provisions hereof; provided,
however, on July 31 of each year during the term commencing in 2002, this
Agreement shall be extended for an additional year unless either party shall
give thirty (30) days prior written notice not to automatically extend the term
for an additional year.
3. Duties and Responsibilities.
(a) Executive agrees during the term of his employment
hereunder to use his best efforts, skills and abilities to promote
Company' s business and interests and to perform such duties consistent
with his appointment as Chairman of the Board and Chief Executive
Officer as may be assigned to him by the Board of Directors of Company
or the Executive Committee of the Board of Directors of the Company.
Executive shall maintain communication with the Board of Directors of
Company concerning his areas of
<PAGE> 3
- 2 -
responsibility and shall supply them with written reports, business
plans, budgets, forecasts and other studies concerning the business of
the Company as he shall prepare from time to time during his employment
by the Company hereunder, which reports, plans, budgets, forecasts and
other studies shall be implemented only with the approval of the Board
of Directors.
(b) Executive agrees to abide by any and all rules and
regulations governing the transaction of business as the Board of
Directors of Company may from time to time adopt or approve.
4. Election as Director and Officer. It is contemplated that
Executive will continue to be elected as a member of the Board of Directors, a
member of the Executive Committee of the Board of Directors and as Chief
Executive Officer of Company and shall be retained in such posts throughout his
employment by Company.
5. Compensation. Company shall pay Executive in full payment for
any and all services rendered by him hereunder, including, without limitation,
all services as an officer or Director or both of Company, its subsidiaries or
affiliates, at an annual rate of Five Hundred Fifty-Five Thousand and 00/100
Dollars ($555,000), subject to increase (but not decrease) at the discretion of
the Board of Directors and payable in accordance with the customary payroll
practices of Company (but not less often than monthly). If Executive's salary is
increased by the Board of Directors, such increased salary shall become the
minimum amount of compensation payable to Executive under this Agreement, and
will not be reduced thereafter. Executive shall also participate in the
Company's annual performance based incentives or any replacement or successor to
such incentives, and shall be eligible to receive bonuses thereunder in
accordance with the terms thereof.
6. Additional Employment Benefits. Executive shall be entitled to
participate in all benefits made generally available by Company to its executive
officers during the period covered by this Agreement, including, without
limitation, vacations, pension plans, profit sharing plans, stock option plans,
deferred compensation plans, hospitalization insurance, health and accident
insurance, disability insurance, group term life insurance, automobile
allowances, and all other fringe benefits which may be provided by Company for
any of its executive officers during the term of employment pursuant to this
Agreement.
7. Indemnification. The Company shall indemnify Executive (and
Executive's legal representatives or other successors) to the fullest extent
permitted by the Certificate of Incorporation and By-Laws of the Company and the
laws of the Commonwealth of Kentucky, as in effect at such time or from time to
time, and Executive shall be entitled to the protection of any insurance
policies the Company may elect to maintain generally for the benefit of its
directors and officers (and to the extent the Company maintains such an
insurance policy or policies, Executive shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage
<PAGE> 4
- 3 -
available for any Company officer or director), against all costs, charges and
expenses whatsoever incurred or sustained by Executive or Executive's legal
representatives at the time such costs, charges and expenses are incurred or
sustained, in connection with any action, suit or proceeding to which Executive
(or Executive's legal representatives or other successors) may be made a party
by reason of Executive's being or having been a director, officer or employee of
the Company.
8. Termination. Executive's rights under this Agreement shall
continue until expiration of the term under Section 2 hereof, unless prior
thereto: (i) Executive dies; (ii) Executive is dismissed without cause pursuant
to Section 9 hereof; (iii) Executive is dismissed for cause as defined in
Section 10 hereof; or (iv) Company determines that Executive has become
disabled, as provided in Section 11 hereof.
9. Early Termination.
(a) Notwithstanding anything to the contrary herein, the
Company shall have the right at any time, at its sole option, to
terminate Executive's employment hereunder without cause upon thirty
(30) days' prior written notice; provided, however, if the Company
delivers notice that Executive's employment is terminated pursuant to
this Section 9(a) or delivers notice not to automatically extend the
term pursuant to Section 2 hereof, Company shall pay Executive, and
Executive shall accept in full satisfaction of Company's obligations
under this Agreement, an amount, payable in a lump sum payment promptly
upon termination, equal to three (3) times the sum of (i) the annual
base salary in effect at the termination date, plus (ii) the average
annual bonus compensation payable to Executive during the prior three
(3) fiscal years, and (iii) the average annual award under the Deferred
Compensation Plan (as hereinafter defined) during the prior three (3)
fiscal years,
(b) In the event of a "change in control" of the Company
(as hereinafter defined), (i) this Agreement shall be deemed terminated
as of the date of the Change in Control, and the Company shall pay to
Executive the payment required under Section 9(a) hereof ; and (ii) the
Executive shall be entitled to receive from the Company the following
additional benefits:
(1) The Company shall pay Executive a lump sum,
in cash, equal to Executive's earned but unpaid base salary
and other earned but unpaid cash entitlements for the period
through and including the date of termination of Executive's
employment, including unused earned and accrued vacation pay
and unreimbursed business expenses. In addition, Executive
shall be entitled to any other benefits earned or accrued by
Executive for the period through and including the date of
termination of Executive's employment under any other employee
benefit plans and arrangements maintained by the Company, in
accordance with the terms of such plans and arrangements,
except as modified herein.
<PAGE> 5
- 4 -
(2) All outstanding stock options held by
Executive shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control.
(3) All of the Executive's rights in and to the
account under the Comair Holdings, Inc. Deferred Incentive
Compensation Plan ("Deferred Compensation Plan") shall
automatically vest in full without further action as of the
date of the Change in Control, and the Company shall pay, or
cause the trustee under the Deferred Incentive Compensation
Rabbi Trust Agreement ("Rabbi Trust Agreement") to pay
Executive a lump sum equal to Executive's account in full as
vested hereunder.
(4) The Company shall provide Executive with a
fully paid-up term life insurance policy and disability policy
(with premiums pre-paid for the remainder of Executive's life)
on Executive's life, providing Executive's beneficiaries with
a death benefit and disability benefits of an amount equal to
such benefits provided by the Company during the period prior
to the Change in Control.
(5) The Company shall provide Executive and
Executive's spouse, for the remainder of their respective
lives, family medical insurance coverage and benefits
comparable to such insurance coverage provided to executives
of the Company; provided, however, at the election of the
Executive, the Company shall pay Executive a lump sum, in
cash, equal to the present value (as of the date of the Change
in Control) of medical insurance coverage for the remaining
joint life expectancy of Executive and Executive's spouse.
(6) Executive and Executive's spouse, for the
remainder of their respective lives, and Executive's dependent
children, for so long as they are under age 18 (or under age
23 if a full-time student), shall be entitled to free
system-wide flight privileges on Company flights to any
location which the Company serves. Such privileges shall
entitle Executive, Executive's spouse and Executive's
dependent children to unlimited positive space (or space
available, at Executive's option) tickets; provided further
that all of such flight privileges shall otherwise be subject
to the same conditions and restrictions as pertain from time
to time to the flight privileges generally provided by the
Company to its executives. Nothing herein shall be deemed as a
limitation upon any flight privileges for which Executive may
otherwise qualify.
(7) Executive shall, during the remainder of
Executive's lifetime, have access to and the right to travel
upon reasonable notice (based on industry standards) on
private aircraft furnished by the Company substantially
comparable to the largest
<PAGE> 6
- 5 -
corporate aircraft operated by the Company (or any subsidiary
or affiliate) as of the date of the Change in Control, at the
sole cost and expense of the Company; provided, however, if
such travel exceeds fifty (50) flight hours (measured by block
hours) in any twelve (12) month period, Executive shall
reimburse the Company for such excess travel in an amount
equal to the Company's actual out of pocket operating costs.
(c) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Company or a
subsidiary, or any Company or subsidiary's employee benefit
plan (including any trustee of such plan acting as trustee)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the
Company or Comair, Inc, ("Comair") representing 50% or more of
the combined voting power of the Company's or Comair's then
outstanding securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not the Company or subsidiary is then subject to such
reporting requirement;
(iii) When, during any period of 2 consecutive
years during the term of this Agreement, the individuals who,
at the beginning of such period, constitute the Board of the
Company, cease for any reason other than death to constitute
at least a two-thirds (2/3) majority thereof; provided,
however, that a director who was not a director at the
beginning of such period shall be deemed to have satisfied the
two-year requirement if such director was elected by, or on
the recommendation of, at least two-thirds (2/3) of the
directors who were directors at the beginning of such period
(either actually or by prior operation of this Subsection
9(c)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company or
Comair by an entity other than any subsidiary through purchase
of assets, by merger, or otherwise.
(d) If any portion of the payments hereunder or any other
payment under this Agreement, or under any other agreement with, or
plan of the Company, including but not limited to stock options and
other long-term incentives (in the aggregate "Total Payments") would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and
<PAGE> 7
- 6 -
penalties, are hereinafter collectively referred to as the "Excise
Tax"), then Executive shall be entitled to under this paragraph and
Company agrees to pay a lump sum, in cash, an additional amount such
that after payment by Executive of all of Executive's applicable
Federal, state and local taxes, including any Excise Tax, imposed upon
such additional amount, Executive will retain an amount equal to the
Excise Tax imposed on the Total Payments. For purposes of this Section
9, Executive's applicable Federal, state and local taxes shall be
computed at the maximum marginal rates, taking into account the effect
of any loss of personal exemptions resulting from receipt of the
additional payments hereunder.
(e) After the date of a Change in Control, the Company
shall not (other than pursuant to Section 9(b)(ii)(3) hereof) take any
steps to disturb or alter Executive's (or Executive's beneficiaries')
rights to receive amounts deferred under the Deferred Compensation Plan
in accordance with such Executive's applicable payment elections as in
effect from time to time. Nothing herein or in the Rabbi Trust
Agreement shall relieve the Company of its obligation to pay benefits
under the Deferred Compensation Plan in accordance with the terms of
such Plan, to the extent such benefits are not paid under the Rabbi
Trust Agreement.
(f) In the event of a dissolution or liquidation of the
Company or Comair or any merger (other than a merger for the purpose of
the re-domestication of the Company or Comair not involving a Change in
Control), consolidation, exchange or other transaction in which the
Company or Comair, respectively is not the surviving corporation or in
which the outstanding shares of the Company or Comair, respectively are
converted into cash, other securities or other property, Company shall
pay to Executive or the estate or legal representative of Executive, an
amount equal to the payment due under Sections 9(a) and 9(b) hereof
upon such dissolution, liquidation, merger, consolidation, exchange or
other transaction. Executive shall also receive all vested benefits or
other amounts and benefits which Executive is entitled to receive under
any plan, policy, practice or program of the Company at the date of
such dissolution, liquidation, merger, consolidation, exchange or other
transaction in accordance with such plan, policy, practice or program.
(g) If Executive's employment is terminated due to death
or disability, Company shall, thereafter, pay to Executive or the
estate or legal representative of Executive an amount equal to the
payment due under Section 9(a) hereof upon termination of this
Agreement. Executive shall also receive all vested benefits or other
amounts and benefits which Executive is entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to
the date of such death or disability in accordance with such plan,
policy, practice or program.
<PAGE> 8
- 7 -
10. Termination for Cause.
(a) Anything herein to the contrary notwithstanding,
Company shall have the right to terminate Executive's employment
hereunder for cause, as such term is defined in the following section.
(b) For the purpose of this Section 10, the term "cause"
means (and shall be limited to) (i) fraud, misappropriation,
embezzlement, intentional and material damage to the property of
Company; or (ii) material breach of any of the provisions of this
Agreement described in Section 13.
(c) Upon termination of Executive's employment for cause
pursuant to this Section 10, Executive shall not, except as otherwise
required by law, be entitled to receive any further compensation other
than accrued benefits under benefit plans of the Company, including
without limitation stock option, deferred compensation, profit sharing
and pension plans, if any, and shall be completely relieved of his
position as an officer and director of Company, its subsidiaries and
affiliates, and Executive covenants and agrees to deliver at the
termination date all resignations necessary to effect his termination
as an employee, officer and director.
11. Disability.
(a) If, during the term of this Agreement, Executive
contracts an illness or other disability which prevents performance by
him of his duties as an executive officer for a consecutive period of
six (6) months or more, then Company at its option, may at any time
thereafter terminate this Agreement by serving thirty (30) days written
notice thereof on Executive and this Agreement shall terminate and come
to an end upon the date set forth in said notice as if such date were
the termination date of this Agreement. If prior to the date specified
in such notice, Executive's illness or incapacity shall have been
eliminated or corrected and Executive is physically and mentally able
to perform his duties as an executive officer and shall have taken up
and is performing such duties on a full time basis, he shall be
entitled to resume employment hereunder as though such notice had not
been given.
(b) During any period of disability and prior to the
termination of this Agreement as in this Section provided, Executive
shall continue to be paid in full by Company in accordance with the
provisions of Section 5, except that Company shall deduct from
Executive's compensation as herein provided an amount equal to any
disability insurance payments received by Executive for such period
pursuant to disability insurance policies paid for and maintained by
Company for the benefit of Executive.
<PAGE> 9
- 8 -
(c) If there should be any dispute between the parties as
to Executive's physical or mental disability at any time, such
questions shall be settled by the majority opinion of three impartial,
reputable physicians, one of whom shall be selected by Company, another
by Executive, and the third by the two physicians selected by Company
and Executive. The certificate of two such physicians as to the matter
in dispute shall be final and binding on the parties.
(d) Upon the date of termination of this Agreement under
this Section 11 due to disability, Executive shall receive the payments
and benefits set forth in Section 9(g) hereof.
12. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company at or subsequent to the date of termination of Executive's
employment shall be payable in accordance with such plan, policy, practice, or
program except as expressly modified by this Agreement.
13. Confidentiality and Non-Competition.
(a) Except as otherwise required by law, rule or
regulation, court order or valid subpoena, Executive will not at any
time during the term of this Agreement or thereafter, except as
authorized by Company, knowingly divulge, furnish or make accessible to
any person, firm, corporation or other entity, any such confidential
and sensitive information and any other information not otherwise
publicly available which he presently possesses or which he may obtain
during the course of his employment with respect to the business,
customers and affairs of Company or any subsidiary or affiliate of
Company or trade secrets, developments, know-how methods or other
information and data pertaining to practices, equipment, developments
or any confidential or secret aspect of the business of Company or any
subsidiary or affiliate of Company, and that all such matters and
information shall be kept strictly and absolutely confidential.
Executive, upon termination of his employment, irrespective of the
time, manner or cause of termination, will surrender and deliver to
Company all lists, books, records and data of every kind relating to or
in connection with the business of Company or any subsidiary or
affiliate of Company, and all property belonging to Company and any
subsidiary or affiliate of Company.
(b) During the term of this Agreement and, in the event
that Executive's employment with Company is terminated for any reason
other than a Change in Control as defined in Section 9 hereof, for a
period of one (1) year after such termination, Executive
<PAGE> 10
- 9 -
shall not, directly or indirectly, engage in or contract with others to
engage in any business enterprise, line of work, consulting contract,
joint venture or other arrangement which conducts a business or
businesses substantially similar to the business conducted by Company
in any area in which Company or any of its affiliates or subsidiaries
provides or plans to provide air transportation to the public.
Executive acknowledges that the geographic area covered hereby, and the
period and nature of the agreed restrictions are reasonable and
necessary for the protection of the business of Company. All provisions
of this paragraph concerning non-competition are severable; and while
it is the intention of the parties that all of said provisions shall be
enforceable, if any one of the same shall be held to be unenforceable
in whole or in part, the remainder shall continue to be in full force
and effect.
14. Irreparable Injury. Executive acknowledges that his compliance
with his duties and obligations under Section 13 is necessary to protect the
goodwill and other proprietary interests of Company and the purposes and essence
of this Agreement. Executive acknowledges that a breach of his duties and
obligations under Section 13 will result in irreparable and continuing damage to
Company for which there will be no adequate remedy at law; and agrees that, in
the event of any breach of any of the aforesaid duties and obligations, Company
and its successors and assigns shall be entitled to injunctive or other
equitable relief and to such other and further relief as may be proper.
15. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Executive,
Executive's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
16. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U. S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Executive, at P. O. Box
227, Verona, Kentucky 41092, or such other address as either party may specify
in a written notice to the other party.
17. Entire Agreement and Amendment. This Agreement embodies the
entire agreement between the parties and supersedes all prior agreements,
whether written or oral, relating to the object matter herein. Any amendment
hereto shall be in writing and executed by the duly authorized representatives
of each party.
<PAGE> 11
- 10 -
18. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky.
19. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
20. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: COMAIR HOLDINGS, INC.
BY: /s/ Peter H. Forster
- -------------------------------- --------------------------------
/s/ David R. Mueller
- -------------------------------- -----------------------------------
DAVID R. MUELLER
<PAGE> 1
EXHIBIT (c)(3)
RESTATED EMPLOYMENT AGREEMENT
OF DAVID A. SIEBENBURGEN
<PAGE> 2
EXHIBIT (c)(3)
RESTATED EMPLOYMENT AGREEMENT
THIS RESTATED EMPLOYMENT AGREEMENT ("Agreement") is dated as of August
10, 1999, by and between COMAIR HOLDINGS, INC., a Kentucky corporation
("Company"), and DAVID A. SIEBENBURGEN ("Executive").
W I T N E S S E T H:
WHEREAS, the Company and Executive entered into an Employment Agreement
dated June 30, 1986 as restated by Restated Employment Agreement dated as of
June l, 1988, and further restated by Restated Employment Agreement dated as of
April 1, 1998, as amended by Amendment to Restated Employment Agreement dated as
of May 18, 1999, which they desire to amend and restate; and
WHEREAS, Company desires to continue to employ Executive as President
and Chief Operating Officer, and Executive desires to continue to perform such
duties;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Employment. The Company does hereby continue to employ
Executive, subject to the terms and conditions hereinafter set forth, as an
executive employee and officer of the Company with the title of President and
Chief Operating Officer or such other executive title or titles as determined by
the Board of Directors of Company from time to time, and Executive accepts such
employment upon the terms and conditions herein set forth.
2. Term. The term of this Agreement shall be for three (3) years,
which shall commence on August 1, 1999, and shall terminate on July 31, 2002,
unless sooner terminated in accordance with the provisions hereof; provided,
however, on July 31 of each year during the term commencing in 2002, this
Agreement shall be extended for an additional year unless either party shall
give thirty (30) days prior written notice not to automatically extend the term
for an additional year.
3. Duties and Responsibilities.
(a) Executive agrees during the term of his employment
hereunder to use his best efforts, skills and abilities to promote
Company' s business and interests and to perform such duties consistent
with his appointment as President and Chief Operating Officer as may be
assigned to him by the Chief Executive Officer, Board of Directors of
Company or the Executive Committee of the Board of Directors of the
Company. Executive shall maintain communication with the Chairman,
Chief Executive Officer and the Board of Directors of Company
concerning his areas of responsibility and shall supply them with
written reports,
<PAGE> 3
- 2 -
business plans, budgets, forecasts and other studies concerning the
business of the Company as he shall prepare from time to time during
his employment by the Company hereunder, which reports, plans, budgets,
forecasts and other studies shall be implemented only with the approval
of the Board of Directors.
(b) Executive agrees to abide by any and all rules and
regulations governing the transaction of business as the Board of
Directors of Company may from time to time adopt or approve.
4. Election as Director and Officer. It is contemplated that
Executive will continue to be elected as a member of the Board of Directors and
appointed President and Chief Operating Officer of Company and shall be retained
in such posts throughout his employment by Company.
5. Compensation. Company shall pay Executive in full payment for
any and all services rendered by him hereunder, including, without limitation,
all services as an officer or Director or both of Company, its subsidiaries or
affiliates, a salary at an annual rate of Five Hundred Thousand and 00/100
Dollars ($500,000), subject to increase (but not decrease) at the discretion of
the Board of Directors and payable in accordance with the customary payroll
practices of Company (but not less often than monthly). If Executive's salary is
increased by the Board of Directors, such increased salary shall become the
minimum amount of compensation payable to Executive under this Agreement, and
will not be reduced thereafter. Executive shall also participate in the
Company's annual performance based incentives, or any replacement or successor
to such incentives, and shall be eligible to receive bonuses thereunder in
accordance with the terms thereof.
6. Additional Employment Benefits. Executive shall be entitled to
participate in all benefits made generally available by Company to its executive
officers during the period covered by this Agreement, including, without
limitation, vacations, pension plans, profit sharing plans, stock option plans,
deferred compensation plans, hospitalization insurance, health and accident
insurance, disability insurance, group term life insurance, automobile
allowances and all other fringe benefits which may be provided by Company for
any of its executive officers during the term of employment pursuant to this
Agreement.
7. Indemnification. The Company shall indemnify Executive (and
Executive's legal representatives or other successors) to the fullest extent
permitted by the Certificate of Incorporation and By-Laws of the Company and the
laws of the Commonwealth of Kentucky, as in effect at such time or from time to
time, and Executive shall be entitled to the protection of any insurance
policies the Company may elect to maintain generally for the benefit of its
directors and officers (and to the extent the Company maintains such an
insurance policy or policies, Executive shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage available for any Company officer or director), against all costs,
charges and expenses whatsoever incurred or sustained by Executive or
Executive's legal representatives at the time such costs, charges and expenses
are incurred or sustained, in connection with any action, suit or proceeding to
<PAGE> 4
- 3 -
which Executive (or Executive's legal representatives or other successors) may
be made a party by reason of Executive's being or having been a director,
officer or employee of the Company.
8. Termination. Executive's rights under this Agreement shall
continue until expiration of the term under Section 2 hereof, unless prior
thereto: (i) Executive dies; (ii) Executive is dismissed without cause pursuant
to Section 9 hereof; (iii) Executive is dismissed for cause as defined in
Section 10 hereof; or (iv) Company determines that Executive has become
disabled, as provided in Section 11 hereof.
9. Early Termination.
(a) Notwithstanding anything to the contrary herein, the
Company shall have the right at any time, at its sole option, to
terminate Executive's employment hereunder without cause upon thirty
(30) days' prior written notice; provided, however, if the Company
delivers notice that Executive's employment is terminated pursuant to
this Section 9(a) or delivers notice not to automatically extend the
term pursuant to Section 2 hereof, Company shall pay Executive, and
Executive shall accept in full satisfaction of Company's obligations
under this Agreement, an amount, payable in a lump sum payment promptly
upon termination, equal to three (3) times the sum of (i) the annual
base salary in effect at the termination date, plus (ii) the greater of
(x) average annual bonus compensation payable to Executive during the
prior three (3) fiscal years, or (y) Executive's annual bonus
compensation paid with respect to fiscal 1999 in the amount of Three
Hundred and Two Thousand Four Hundred and 00/100 Dollars ($302,400),
plus (iii) the greater of (x) the average annual award under the
Deferred Compensation Plan (as hereinafter defined) during the prior
three (3) fiscal years or (y) Executive's award under the Deferred
Compensation Plan (as hereinafter defined) with respect to fiscal 1999
in the amount of Four Hundred Twenty-Five Thousand and 00/100 Dollars
($425,000).
(b) In the event of a "change in control" of the Company
(as hereinafter defined), (i) this Agreement shall be deemed terminated
as of the date of the Change in Control, and the Company shall pay to
Executive the payment required under Section 9(a) hereof ; and (ii) the
Executive shall be entitled to receive from the Company the following
additional benefits:
(1) The Company shall pay Executive a lump sum,
in cash, equal to Executive's earned but unpaid base salary
and other earned but unpaid cash entitlements for the period
through and including the date of termination of Executive's
employment, including unused earned and accrued vacation pay
and unreimbursed business expenses. In addition, Executive
shall be entitled to any other benefits earned or accrued by
Executive for the period through and including the date of
termination of Executive's employment under any other employee
benefit plans
<PAGE> 5
- 4 -
and arrangements maintained by the Company, in accordance with
the terms of such plans and arrangements, except as modified
herein.
(2) All outstanding stock options held by
Executive shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control.
(3) All of the Executive's rights in and to the
account under the Comair Holdings, Inc. Deferred Incentive
Compensation Plan ("Deferred Compensation Plan") shall
automatically vest in full without further action as of the
date of the Change in Control, and the Company shall pay, or
cause the trustee under the Deferred Incentive Compensation
Rabbi Trust Agreement ("Rabbi Trust Agreement") to pay
Executive a lump sum equal to Executive's account in full as
vested hereunder.
(4) The Company shall provide Executive with a
fully paid-up term life insurance policy and disability policy
(with premiums pre-paid for the remainder of Executive's life)
on Executive's life, providing Executive's beneficiaries with
a death benefit and disability benefits of an amount equal to
such benefits provided by the Company during the period prior
to the Change in Control.
(5) The Company shall provide Executive and
Executive's spouse, for the remainder of their respective
lives, family medical insurance coverage and benefits
comparable to such insurance coverage provided to executives
of the Company; provided, however, at the election of the
Executive, the Company shall pay Executive a lump sum, in
cash, equal to the present value (as of the date of the Change
in Control) of medical insurance coverage for the remaining
joint life expectancy of Executive and Executive's spouse.
(6) Executive and Executive's spouse, for the
remainder of their respective lives, and Executive's dependent
children, for so long as they are under age 18 (or under age
23 if a full-time student), shall be entitled to free
system-wide flight privileges on Company flights to any
location which the Company serves. Such privileges shall
entitle Executive, Executive's spouse and Executive's
dependent children to unlimited positive space (or space
available, at Executive's option) tickets; provided further
that all of such flight privileges shall otherwise be subject
to the same conditions and restrictions as pertain from time
to time to the flight privileges generally provided by the
Company to its executives. Nothing herein shall be deemed as a
limitation upon any flight privileges for which Executive may
otherwise qualify.
<PAGE> 6
- 5 -
(7) Executive shall, during the remainder of
Executive's lifetime, have access to and the right to travel
upon reasonable notice (based on industry standards) on
private aircraft furnished by the Company substantially
comparable to the largest corporate aircraft operated by the
Company (or any subsidiary or affiliate) as of the date of the
Change in Control, at the sole cost and expense of the
Company; provided, however, if such travel exceeds fifty (50)
flight hours (measured by block hours) in any twelve (12)
month period, Executive shall reimburse the Company for such
excess travel in an amount equal to the Company's actual out
of pocket operating costs.
(c) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Company or a
subsidiary, or any Company or subsidiary's employee benefit
plan (including any trustee of such plan acting as trustee)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the
Company or Comair, Inc., ("Comair") representing 50% or more
of the combined voting power of the Company's or Comair's then
outstanding securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not the Company or subsidiary is then subject to such
reporting requirement;
(iii) When, during any period of 2 consecutive
years during the term of this Agreement, the individuals who,
at the beginning of such period, constitute the Board of the
Company, cease for any reason other than death to constitute
at least a two-thirds (2/3) majority thereof; provided,
however, that a director who was not a director at the
beginning of such period shall be deemed to have satisfied the
two-year requirement if such director was elected by, or on
the recommendation of, at least two-thirds (2/3) of the
directors who were directors at the beginning of such period
(either actually or by prior operation of this Subsection
9(c)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company or
Comair by an entity other than any subsidiary through purchase
of assets, by merger, or otherwise.
(d) If any portion of the payments hereunder or any
other payment under this Agreement, or under any other agreement with,
or plan of the Company, including but not limited to stock options and
other long-term incentives (in the aggregate "Total Payments")
<PAGE> 7
- 6 -
would be subject to the excise tax imposed by Section 4999 of the Code
or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to under this paragraph and Company agrees
to pay a lump sum, in cash, an additional amount such that after
payment by Executive of all of Executive's applicable Federal, state
and local taxes, including any Excise Tax, imposed upon such additional
amount, Executive will retain an amount equal to the Excise Tax imposed
on the Total Payments. For purposes of this Section 9, Executive's
applicable Federal, state and local taxes shall be computed at the
maximum marginal rates, taking into account the effect of any loss of
personal exemptions resulting from receipt of the additional payments
hereunder.
(e) After the date of a Change in Control, the Company
shall not (other than pursuant to Section 9(b)(ii)(3) hereof) take any
steps to disturb or alter Executive's (or Executive's beneficiaries')
rights to receive amounts deferred under the Deferred Compensation Plan
in accordance with such Executive's applicable payment elections as in
effect from time to time. Nothing herein or in the Rabbi Trust
Agreement shall relieve the Company of its obligation to pay benefits
under the Deferred Compensation Plan in accordance with the terms of
such Plan, to the extent such benefits are not paid under the Rabbi
Trust Agreement.
(f) In the event of a dissolution or liquidation of the
Company or Comair or any merger (other than a merger for the purpose of
the re-domestication of the Company or Comair not involving a Change in
Control), consolidation, exchange or other transaction in which the
Company or Comair, respectively is not the surviving corporation or in
which the outstanding shares of the Company or Comair, respectively are
converted into cash, other securities or other property, Company shall
pay to Executive or the estate or legal representative of Executive, an
amount equal to the payment due under Sections 9(a) and 9(b) hereof
upon such dissolution, liquidation, merger, consolidation, exchange or
other transaction. Executive shall also receive all vested benefits or
other amounts and benefits which Executive is entitled to receive under
any plan, policy, practice or program of the Company at the date of
such dissolution, liquidation, merger, consolidation, exchange or other
transaction in accordance with such plan, policy, practice or program.
(g) If Executive's employment is terminated due to death
or disability, Company shall, thereafter, pay to Executive or the
estate or legal representative of Executive an amount equal to the
payment due under Section 9(a) hereof upon termination of this
Agreement. Executive shall also receive all vested benefits or other
amounts and benefits which Executive is entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to
the date of such death or disability in accordance with such plan,
policy, practice or program.
<PAGE> 8
- 7 -
10. Termination for Cause.
(a) Anything herein to the contrary notwithstanding,
Company shall have the right to terminate Executive's employment
hereunder for cause, as such term is defined in the following section.
(b) For the purpose of this Section 10, the term "cause"
means (and shall be limited to) (i) fraud, misappropriation,
embezzlement, intentional and material damage to the property of
Company; or (ii) material breach of any of the provisions of this
Agreement described in Section 13.
(c) Upon termination of Executive's employment for cause
pursuant to this Section 10, Executive shall not, except as otherwise
required by law, be entitled to receive any further compensation other
than accrued benefits under benefit plans of the Company, including
without limitation stock option, deferred compensation, profit sharing
and pension plans, if any, and shall be completely relieved of his
position as an officer and director of Company, its subsidiaries and
affiliates, and Executive covenants and agrees to deliver at the
termination date all resignations necessary to effect his termination
as an employee, officer and director.
11. Disability.
(a) If, during the term of this Agreement, Executive
contracts an illness or other disability which prevents performance by
him of his duties as an executive officer for a consecutive period of
six (6) months or more, then Company at its option, may at any time
thereafter terminate this Agreement by serving thirty (30) days written
notice thereof on Executive and this Agreement shall terminate and come
to an end upon the date set forth in said notice as if such date were
the termination date of this Agreement. If prior to the date specified
in such notice, Executive's illness or incapacity shall have been
eliminated or corrected and Executive is physically and mentally able
to perform his duties as an executive officer and shall have taken up
and is performing such duties on a full time basis, he shall be
entitled to resume employment hereunder as though such notice had not
been given.
(b) During any period of disability and prior to the
termination of this Agreement as in this Section provided, Executive
shall continue to be paid in full by Company in accordance with the
provisions of Section 5, except that Company shall deduct from
Executive's compensation as herein provided an amount equal to any
disability insurance payments received by Executive for such period
pursuant to disability insurance policies paid for and maintained by
Company for the benefit of Executive.
(c) If there should be any dispute between the parties as
to Executive's physical or mental disability at any time, such
questions shall be settled by the majority opinion of
<PAGE> 9
- 8 -
three impartial, reputable physicians, one of whom shall be selected by
Company, another by Executive, and the third by the two physicians
selected by Company and Executive. The certificate of two such
physicians as to the matter in dispute shall be final and binding on
the parties.
(d) Upon the date of termination of this Agreement under
this Section 11 due to disability, Executive shall receive the payments
and benefits set forth in Section 9(g) hereof.
12. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company, at or subsequent to the date of termination of Executive's
employment shall be payable in accordance with such plan, policy, practice, or
program except as expressly modified by this Agreement.
13. Confidentiality and Non-Competition.
(a) Except as otherwise required by law, rule or
regulation, court order or valid subpoena, Executive will not at any
time during the term of this Agreement or thereafter, except as
authorized by Company, knowingly divulge, furnish or make accessible to
any person, firm, corporation or other entity, any such confidential
and sensitive information and any other information not otherwise
publicly available which he presently possesses or which he may obtain
during the course of his employment with respect to the business,
customers and affairs of Company or any subsidiary or affiliate of
Company or trade secrets, developments, know-how methods or other
information and data pertaining to practices, equipment, developments
or any confidential or secret aspect of the business of Company or any
subsidiary or affiliate of Company, and that all such matters and
information shall be kept strictly and absolutely confidential.
Executive, upon termination of his employment, irrespective of the
time, manner or cause of termination, will surrender and deliver to
Company all lists, books, records and data of every kind relating to or
in connection with the business of Company or any subsidiary or
affiliate of Company, and all property belonging to Company and any
subsidiary or affiliate of Company.
(b) During the term of this Agreement and, in the event
that Executive's employment with Company is terminated for any reason
other than a Change in Control as defined in Section 9 hereof, for a
period of one (1) year after such termination, Executive shall not,
directly or indirectly, engage in or contract with others to engage in
any business enterprise, line of work, consulting contract, joint
venture or other arrangement which conducts a business or businesses
substantially similar to the business conducted by
<PAGE> 10
- 9 -
Company in any area in which Company or any of its affiliates or
subsidiaries provides or plans to provide air transportation to the
public. Executive acknowledges that the geographic area covered hereby,
and the period and nature of the agreed restrictions are reasonable and
necessary for the protection of the business of Company. All provisions
of this paragraph concerning non-competition are severable; and while
it is the intention of the parties that all of said provisions shall be
enforceable, if any one of the same shall be held to be unenforceable
in whole or in part, the remainder shall continue to be in full force
and effect.
14. Irreparable Injury. Executive acknowledges that his compliance
with his duties and obligations under Section 13 is necessary to protect the
goodwill and other proprietary interests of Company and the purposes and essence
of this Agreement. Executive acknowledges that a breach of his duties and
obligations under Section 13 will result in irreparable and continuing damage to
Company for which there will be no adequate remedy at law; and agrees that, in
the event of any breach of any of the aforesaid duties and obligations, Company
and its successors and assigns shall be entitled to injunctive or other
equitable relief and to such other and further relief as may be proper.
15. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Executive,
Executive's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
16. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U. S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Executive, at 7582 Squirrel
Creek, Cincinnati, Ohio 45247, or such other address as either party may specify
in a written notice to the other party.
17. Entire Agreement and Amendment. This Agreement embodies the
entire agreement between the parties and supersedes all prior agreements,
whether written or oral, relating to the object matter herein. Any amendment
hereto shall be in writing and executed by the duly authorized representatives
of each party.
18. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky.
<PAGE> 11
- 10 -
19. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
20. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: COMAIR HOLDINGS, INC.
BY: /s/ Peter H. Forster
- -------------------------------- --------------------------------
/s/ David A. Siebenburgen
- -------------------------------- -----------------------------------
DAVID A. SIEBENBURGEN
<PAGE> 1
EXHIBIT (c)(4)
EMPLOYMENT AGREEMENT
OF CHARLES E. CURRAN
<PAGE> 2
EXHIBIT (c)(4)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is dated as of August 10, 1999,
by and between COMAIR, INC., an Ohio corporation ("Company"), with its principal
place of business at 2258 Tower Drive, Erlanger, Kentucky, and CHARLES E. CURRAN
("Executive").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the State of Ohio
and engaged in the airline business; and
WHEREAS, Company and Executive desire to enter into an employment
agreement to employ Executive as an officer of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Employment. The Company does hereby employ Executive, subject
to the terms and conditions hereinafter contained, as an executive employee with
the title of Senior Vice President or such other executive title or titles
hereafter determined by the Board of Directors of Company, and Executive accepts
such employment upon the terms and conditions herein contained.
2. Term. The term of this Agreement shall be two (2) years, which
shall commence on August 1, 1999, and shall terminate on July 31, 2001, unless
sooner terminated in accordance with the provisions hereof; provided, however,
on July 31 of each year during the term commencing in 2001, this Agreement shall
be extended for an additional year unless either party shall give thirty (30)
days' prior written notice not to automatically extend the term for an
additional year.
3. Duties and Responsibilities.
(a) Position and Responsibilities. On the terms and
subject to the conditions set forth in this Agreement, Employer shall
employ Executive to serve in an executive capacity with the Company.
Executive shall perform all duties customarily attendant to the
position of Senior Vice President of Company (or other executive
position) and shall perform such services and duties commensurate with
his position as may from time to time be prescribed by the Board of
Directors of Company (the "Board"). Executive shall perform the
services hereunder at Company's offices in Erlanger, Kentucky, and
shall do such traveling as may be reasonably required of him in the
performance of his duties.
(b) Acceptance. Executive hereby accepts such employment
and agrees that throughout the period of his employment hereunder, he
will devote substantially his full
<PAGE> 3
- 2 -
business time, attention, knowledge, and skills faithfully, diligently,
and to the best of his ability, in the furtherance of the business of
Company; provided, that Executive shall be permitted to serve on the
boards of directors of such other companies as the Board shall approve,
such approval not to be unreasonably withheld, and that Executive may
make personal investments, or act as a director and engage in other
activities for any charitable, educational or other non-profit
institution, if such investments and activities do not materially
interfere with the performance of Executive's duties hereunder.
4. Compensation. Company shall pay Executive in full payment for
any and all services rendered by him hereunder, including, without limitation,
all services as an officer of Company, its subsidiaries or affiliates, a salary
at an annual rate of Two Hundred Twenty Thousand and 00/100 Dollars ($220,000),
subject to increase (but not decrease) at the discretion of the Board of
Directors and payable in accordance with the customary payroll practices of
Company (but not less often than monthly). If Executive's salary is increased by
the Board of Directors, such increased salary shall become the minimum amount of
compensation payable to Executive under this Agreement, and will not be reduced
thereafter. Executive shall also participate in the Company's (or Holdings')
annual performance based incentives, or any replacement or successor to such
incentives, and shall be eligible to receive bonuses thereunder in accordance
with the terms thereof.
5. Additional Employment Benefits. Executive shall be entitled to
participate in all benefits made generally available by Company to its executive
officers during the period covered by this Agreement including, without
limitation, vacations, pension plans, profit sharing plans, stock option plans,
deferred compensation plans, hospitalization insurance, health and accident
insurance, disability insurance, group term life insurance, automobile
allowances and all other fringe benefits which may be provided by Company for
its executive officers during the term of employment.
6. Indemnification. The Company shall indemnify Executive (and
Executive's legal representatives or other successors) to the fullest extent
permitted by the Articles of Incorporation and Code of Regulations of the
Company and the laws of the State of Ohio, as in effect at such time or from
time to time, and Executive shall be entitled to the protection of any insurance
policies the Company or Holdings may elect to maintain generally for the benefit
of its directors and officers (and to the extent the Company or Holdings
maintains such an insurance policy or policies, Executive shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company officer or director), against
all costs, charges and expenses whatsoever incurred or sustained by Executive or
Executive's legal representatives at the time such costs, charges and expenses
are incurred or sustained, in connection with any action, suit or proceeding to
which Executive (or Executive's legal representatives or other successors) may
be made a party by reason of Executive's being or having been a director,
officer or employee of the Company.
<PAGE> 4
- 3 -
7. Termination. Executive's rights under this Agreement shall
continue until expiration of the term under Section 2 hereof, unless prior
thereto: (i) Executive dies; (ii) Executive is dismissed without cause pursuant
to Section 8 hereof; (iii) Executive is dismissed for cause as defined in
Section 9 hereof; or (iv) Company determines that Executive has become disabled,
as provided in Section 10 hereof.
8. Early Termination.
(a) Notwithstanding anything to the contrary herein, the
Company shall have the right at any time, at its sole option, to
terminate Executive's employment hereunder without cause upon thirty
(30) days' prior written notice; provided, however, if the Company
delivers notice that Executive's employment is terminated pursuant to
this Section 8(a) or delivers notice not to automatically extend the
term pursuant to Section 2 hereof, Company shall pay Executive, and
Executive shall accept in full satisfaction of Company's obligations
under this Agreement, an amount, payable in a lump sum payment promptly
upon termination, equal to two (2) times the sum of (i) the annual base
salary in effect at the termination date, plus (ii) the average annual
bonus compensation payable to Executive during the prior three (3)
fiscal years, and (iii) the average annual award under the Deferred
Compensation Plan (as hereinafter defined) during the prior three (3)
fiscal years.
(b) In the event of a "change in control" of the Company
(as hereinafter defined), (i) this Agreement shall be deemed terminated
as of the date of the Change in Control, and the Company shall pay to
Executive the payment required under Section 8(a) hereof ; and (ii) the
Executive shall be entitled to receive from the Company the following
additional benefits:
(1) The Company shall pay Executive a lump sum,
in cash, equal to Executive's earned but unpaid base salary
and other earned but unpaid cash entitlements for the period
through and including the date of termination of Executive's
employment, including unused earned and accrued vacation pay
and unreimbursed business expenses. In addition, Executive
shall be entitled to any other benefits earned or accrued by
Executive for the period through and including the date of
termination of Executive's employment under any other employee
benefit plans and arrangements maintained by the Company, in
accordance with the terms of such plans and arrangements,
except as modified herein.
(2) All outstanding stock options held by
Executive shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control.
<PAGE> 5
- 4 -
(3) All of the Executive's rights in and to the
account under the Comair Holdings, Inc. Deferred Incentive
Compensation Plan ("Deferred Compensation Plan") shall
automatically vest in full without further action as of the
date of the Change in Control, and the Company shall pay, or
cause the trustee under the Deferred Incentive Compensation
Rabbi Trust Agreement ("Rabbi Trust Agreement") to pay
Executive a lump sum equal to Executive's account in full as
vested hereunder.
(4) The Company shall provide Executive with a
term life insurance policy and disability policy for a period
of twenty-four (24) months (with premiums pre-paid for such
period) on Executive's life, providing Executive's
beneficiaries with a death benefit and disability benefits of
an amount equal to such benefits provided by the Company
during the period prior to the Change in Control.
(5) The Company shall provide Executive and
Executive's spouse, for a period of twenty-four (24) months,
family medical insurance coverage and benefits comparable to
such insurance coverage provided to executives of the Company;
provided, however, at the election of the Executive, the
Company shall pay Executive a lump sum, in cash, equal to the
present value (as of the date of the Change in Control) of
medical insurance coverage for such period.
(6) Executive, Executive's spouse and Executive's
dependent children, for so long as they are under age 18 (or
under age 23 if a full-time student), shall be entitled to
free system-wide flight privileges on Company flights to any
location which the Company serves for a period of twenty-four
(24) months. Such privileges shall entitle Executive,
Executive's spouse and Executive's dependent children to
unlimited positive space (or space available, at Executive's
option) tickets; provided further that all of such flight
privileges shall otherwise be subject to the same conditions
and restrictions as pertain from time to time to the flight
privileges generally provided by the Company to its
executives. Nothing herein shall be deemed as a limitation
upon any flight privileges for which Executive may otherwise
qualify.
(c) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Comair
Holdings, Inc. ("Holdings"), Company or a subsidiary, or any
Holdings, Company or subsidiary's employee benefit plan
(including any trustee of such plan acting as trustee) becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
<PAGE> 6
- 5 -
Exchange Act), directly or indirectly of securities of the
Holdings or Company representing 50% or more of the combined
voting power of Holdings' or Company's then outstanding
securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not Holdings, the Company or subsidiary is then subject to
such reporting requirement;
(iii) When, during any period of 2 consecutive
years during the term of this Agreement, the individuals who,
at the beginning of such period, constitute the Board of the
Holdings, cease for any reason other than death to constitute
at least a two-thirds (2/3) majority thereof; provided,
however, that a director who was not a director at the
beginning of such period shall be deemed to have satisfied the
two-year requirement if such director was elected by, or on
the recommendation of, at least two-thirds (2/3) of the
directors who were directors at the beginning of such period
(either actually or by prior operation of this Subsection
8(c)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of Holdings or the
Company by an entity other than any subsidiary through
purchase of assets, by merger, or otherwise.
(d) If any portion of the payments hereunder or any other
payment under this Agreement, or under any other agreement with, or
plan of the Company including, but not limited to, stock options and
other long-term incentives (in the aggregate "Total Payments") would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Executive shall be
entitled to under this paragraph and Company agrees to pay a lump sum,
in cash, an additional amount such that after payment by Executive of
all of Executive's applicable Federal, state and local taxes, including
any Excise Tax, imposed upon such additional amount, Executive will
retain an amount equal to the Excise Tax imposed on the Total Payments.
For purposes of this Section 8, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking
into account the effect of any loss of personal exemptions resulting
from receipt of the additional payments hereunder.
(e) After the date of a Change in Control, the Company
shall not (other than pursuant to Section 8(b)(ii)(3) hereof) take any
steps to disturb or alter Executive's (or Executive's beneficiaries')
rights to receive amounts deferred under the Deferred
<PAGE> 7
- 6 -
Compensation Plan in accordance with such Executive's applicable
payment elections as in effect from time to time. Nothing herein or in
the Rabbi Trust Agreement shall relieve the Company of its obligation
to pay benefits under the Deferred Compensation Plan in accordance with
the terms of such Plan, to the extent such benefits are not paid under
the Rabbi Trust Agreement.
(f) In the event of a dissolution or liquidation of
Holdings or the Company or any merger (other than a merger for the
purpose of the re-domestication of Holdings or the Company not
involving a Change in Control), consolidation, exchange or other
transaction in which Holdings or the Company, respectively, is not the
surviving corporation or in which the outstanding shares of Holdings or
the Company, respectively, are converted into cash, other securities or
other property, Company shall pay to Executive or the estate or legal
representative of Executive, an amount equal to the payment due under
Sections 8(a) and 8(b) hereof upon such dissolution, liquidation,
merger, consolidation, exchange or other transaction. Executive shall
also receive all vested benefits or other amounts and benefits which
Executive is entitled to receive under any plan, policy, practice or
program of the Company at the date of such dissolution, liquidation,
merger, consolidation, exchange or other transaction in accordance with
such plan, policy, practice or program.
(g) If Executive's employment is terminated due to death
or disability, Company shall, thereafter, pay to Executive or the
estate or legal representative of Executive an amount equal to the
payment due under Section 8(a) hereof upon termination of this
Agreement. Executive shall also receive all vested benefits or other
amounts and benefits which Executive is entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to
the date of such death or disability in accordance with such plan,
policy, practice or program.
9. Termination for Cause.
(a) Anything herein to the contrary notwithstanding,
Company shall have the right to terminate Executive's employment
hereunder for cause, as such term is defined in the following section.
(b) For the purpose of this Section 9, the term "cause"
means (and shall be limited to) (i) fraud, misappropriation,
embezzlement, intentional and material damage to the property of
Company; or (ii) material breach of any of the provisions of this
Agreement described in Section 12.
(c) Upon termination of Executive's employment for cause
pursuant to this Section 9, Executive shall not, except as otherwise
required by law, be entitled to receive any
<PAGE> 8
- 7 -
further compensation other than accrued benefits under benefit plans of
the Company, including without limitation stock option, deferred
compensation, profit sharing and pension plans, if any, and shall be
completely relieved of his position as an officer of Company, its
subsidiaries and affiliates, and Executive covenants and agrees to
deliver at the termination date all resignations necessary to effect
the foregoing.
10. Disability.
(a) If, during the term of this Agreement, Executive
contracts an illness or other disability which prevents performance by
him of his duties as an executive officer for a consecutive period of
six (6) months or more, then Company, at its option, may at any time
thereafter terminate this Agreement by serving thirty (30) days'
written notice thereof on Executive and this Agreement shall terminate
and come to an end upon the date set forth in said notice as if such
date were the termination date of this Agreement. If prior to the date
specified in such notice, Executive's illness or incapacity shall have
been eliminated or corrected and Executive is physically and mentally
able to perform his duties as an executive officer and shall have taken
up and is performing such duties on a full time basis, he shall be
entitled to resume employment hereunder as though such notice had not
been given.
(b) During any period of disability and prior to the
termination of this Agreement as in this Section provided, Executive
shall continue to be paid in full by Company in accordance with the
provisions of Section 4, except that Company shall deduct from
Executive's compensation as herein provided an amount equal to any
disability insurance payments received by Executive for such period
pursuant to disability insurance policies paid for and maintained by
Company for the benefit of Executive.
(c) If there should be any dispute between the parties as
to Executive's physical or mental disability at any time, such
questions shall be settled by the majority opinion of three impartial,
reputable physicians, one of whom shall be selected by Company, another
by Executive, and the third by the two physicians selected by Company
and Executive. The certificate of two such physicians as to the matter
in dispute shall be final and binding on the parties.
(d) Upon the date of termination of this Agreement under
this Section 10 due to disability, Executive shall receive the payments
and benefits set forth in Section 8(g) hereof.
11. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
<PAGE> 9
- 8 -
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company, at or subsequent to the date of termination of Executive's
employment shall be payable in accordance with such plan, policy, practice, or
program except as expressly modified by this Agreement.
12. Confidentiality and Non-Competition.
(a) Except as otherwise required by law, rule or
regulation, court order or valid subpoena, Executive will not at any
time during the term of this Agreement or thereafter, except as
authorized by Company, knowingly divulge, furnish or make accessible to
any person, firm, corporation or other entity, any such confidential
and sensitive information and any other information not otherwise
publicly available which he presently possesses or which he may obtain
during the course of his employment with respect to the business,
customers and affairs of Company or any subsidiary or affiliate of
Company or trade secrets, developments, know-how methods or other
information and data pertaining to practices, equipment, developments
or any confidential or secret aspect of the business of Company or any
subsidiary or affiliate of Company, and that all such matters and
information shall be kept strictly and absolutely confidential.
Executive, upon termination of his employment, irrespective of the
time, manner or cause of termination, will surrender and deliver to
Company all lists, books, records and data of every kind relating to or
in connection with the business of Company or any subsidiary or
affiliate of Company, and all property belonging to Company and any
subsidiary or affiliate of Company.
(b) During the term of this Agreement and, in the event
that Executive's employment with Company is terminated for any reason
other than a Change in Control as defined in Section 8 hereof, for a
period of one (1) year after such termination, Executive shall not,
directly or indirectly, engage in or contract with others to engage in
any business enterprise, line of work, consulting contract, joint
venture or other arrangement which conducts a business or businesses
substantially similar to the business conducted by Company in any area
in which Company or any of its affiliates or subsidiaries provides or
plans to provide air transportation to the public. Executive
acknowledges that the geographic area covered hereby, and the period
and nature of the agreed restrictions are reasonable and necessary for
the protection of the business of Company. All provisions of this
paragraph concerning non-competition are severable; and while it is the
intention of the parties that all of said provisions shall be
enforceable, if any one of the same shall be held to be unenforceable
in whole or in part, the remainder shall continue to be in full force
and effect.
13. Irreparable Injury. Executive acknowledges that his compliance
with his duties and obligations under Section 12 is necessary to protect the
goodwill and other proprietary interests
<PAGE> 10
- 9 -
of Company and the purposes and essence of this Agreement. Executive
acknowledges that a breach of his duties and obligations under Section 12 will
result in irreparable and continuing damage to Company for which there will be
no adequate remedy at law; and agrees that, in the event of any breach of any of
the aforesaid duties and obligations, Company and its successors and assigns
shall be entitled to injunctive or other equitable relief and to such other and
further relief as may be proper.
14. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Executive,
Executive's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
15. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U. S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Executive, c/o Comair,
Inc., Post Office Box 75021, Greater Cincinnati International Airport,
Cincinnati, Ohio 45275, or such other address as either party may specify in a
written notice to the other party.
16. Entire Agreement and Amendment. This Agreement embodies the
entire agreement between the parties and supersedes all prior agreements,
whether written or oral, relating to the object matter herein. Any amendment
hereto shall be in writing and executed by the duly authorized representatives
of each party.
17. Choice of Law. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Kentucky.
18. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
19. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
<PAGE> 11
- 10 -
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK. SIGNATURE PAGE FOLLOWS.]
<PAGE> 12
- 11 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: COMAIR HOLDINGS, INC.
BY: /s/ David R. Mueller
- -------------------------------- ---------------------------------
/s/ Charles E. Curran
- -------------------------------- ------------------------------------
CHARLES E. CURRAN
<PAGE> 1
EXHIBIT (c)(5)
EMPLOYMENT AGREEMENT
OF K. MICHAEL STEWART
<PAGE> 2
EXHIBIT (c)(5)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is dated as of August 10, 1999,
by and between COMAIR, INC., an Ohio corporation ("Company"), with its principal
place of business at 2258 Tower Drive, Erlanger, Kentucky, and K. MICHAEL STUART
("Executive").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the State of Ohio
and engaged in the airline business; and
WHEREAS, Company and Executive desire to enter into an employment
agreement to employ Executive as an officer of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Employment. The Company does hereby employ Executive, subject
to the terms and conditions hereinafter contained, as an executive employee with
the title of Senior Vice President or such other executive title or titles
hereafter determined by the Board of Directors of Company, and Executive accepts
such employment upon the terms and conditions herein contained.
2. Term. The term of this Agreement shall be two (2) years, which
shall commence on August 1, 1999, and shall terminate on July 31, 2001, unless
sooner terminated in accordance with the provisions hereof; provided, however,
on July 31 of each year during the term commencing in 2001, this Agreement shall
be extended for an additional year unless either party shall give thirty (30)
days' prior written notice not to automatically extend the term for an
additional year.
3. Duties and Responsibilities.
(a) Position and Responsibilities. On the terms and
subject to the conditions set forth in this Agreement, Employer shall
employ Executive to serve in an executive capacity with the Company.
Executive shall perform all duties customarily attendant to the
position of Senior Vice President of Company (or other executive
position) and shall perform such services and duties commensurate with
his position as may from time to time be prescribed by the Board of
Directors of Company (the "Board"). Executive shall perform the
services hereunder at Company's offices in Erlanger, Kentucky, and
shall do such traveling as may be reasonably required of him in the
performance of his duties.
(b) Acceptance. Executive hereby accepts such employment
and agrees that throughout the period of his employment hereunder, he
will devote substantially his full
<PAGE> 3
- 2 -
business time, attention, knowledge, and skills faithfully, diligently,
and to the best of his ability, in the furtherance of the business of
Company; provided, that Executive shall be permitted to serve on the
boards of directors of such other companies as the Board shall approve,
such approval not to be unreasonably withheld, and that Executive may
make personal investments, or act as a director and engage in other
activities for any charitable, educational or other non-profit
institution, if such investments and activities do not materially
interfere with the performance of Executive's duties hereunder.
4. Compensation. Company shall pay Executive in full payment for
any and all services rendered by him hereunder, including, without limitation,
all services as an officer of Company, its subsidiaries or affiliates, a salary
at an annual rate of Two Hundred Twenty Thousand and 00/100 Dollars ($220,000),
subject to increase (but not decrease) at the discretion of the Board of
Directors and payable in accordance with the customary payroll practices of
Company (but not less often than monthly). If Executive's salary is increased by
the Board of Directors, such increased salary shall become the minimum amount of
compensation payable to Executive under this Agreement, and will not be reduced
thereafter. Executive shall also participate in the Company's (or Holdings')
annual performance based incentives, or any replacement or successor to such
incentives, and shall be eligible to receive bonuses thereunder in accordance
with the terms thereof.
5. Additional Employment Benefits. Executive shall be entitled to
participate in all benefits made generally available by Company to its executive
officers during the period covered by this Agreement including, without
limitation, vacations, pension plans, profit sharing plans, stock option plans,
deferred compensation plans, hospitalization insurance, health and accident
insurance, disability insurance, group term life insurance, automobile
allowances and all other fringe benefits which may be provided by Company for
its executive officers during the term of employment.
6. Indemnification. The Company shall indemnify Executive (and
Executive's legal representatives or other successors) to the fullest extent
permitted by the Articles of Incorporation and Code of Regulations of the
Company and the laws of the State of Ohio, as in effect at such time or from
time to time, and Executive shall be entitled to the protection of any insurance
policies the Company or Holdings may elect to maintain generally for the benefit
of its directors and officers (and to the extent the Company or Holdings
maintains such an insurance policy or policies, Executive shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company officer or director), against
all costs, charges and expenses whatsoever incurred or sustained by Executive or
Executive's legal representatives at the time such costs, charges and expenses
are incurred or sustained, in connection with any action, suit or proceeding to
which Executive (or Executive's legal representatives or other successors) may
be made a party by reason of Executive's being or having been a director,
officer or employee of the Company.
<PAGE> 4
- 3 -
7. Termination. Executive's rights under this Agreement shall
continue until expiration of the term under Section 2 hereof, unless prior
thereto: (i) Executive dies; (ii) Executive is dismissed without cause pursuant
to Section 8 hereof; (iii) Executive is dismissed for cause as defined in
Section 9 hereof; or (iv) Company determines that Executive has become disabled,
as provided in Section 10 hereof.
8. Early Termination.
(a) Notwithstanding anything to the contrary herein, the
Company shall have the right at any time, at its sole option, to
terminate Executive's employment hereunder without cause upon thirty
(30) days' prior written notice; provided, however, if the Company
delivers notice that Executive's employment is terminated pursuant to
this Section 8(a) or delivers notice not to automatically extend the
term pursuant to Section 2 hereof, Company shall pay Executive, and
Executive shall accept in full satisfaction of Company's obligations
under this Agreement, an amount, payable in a lump sum payment promptly
upon termination, equal to two (2) times the sum of (i) the annual base
salary in effect at the termination date, plus (ii) the average annual
bonus compensation payable to Executive during the prior three (3)
fiscal years, and (iii) the average annual award under the Deferred
Compensation Plan (as hereinafter defined) during the prior three (3)
fiscal years.
(b) In the event of a "change in control" of the Company
(as hereinafter defined), (i) this Agreement shall be deemed terminated
as of the date of the Change in Control, and the Company shall pay to
Executive the payment required under Section 8(a) hereof; and (ii) the
Executive shall be entitled to receive from the Company the following
additional benefits:
(1) The Company shall pay Executive a lump sum,
in cash, equal to Executive's earned but unpaid base salary
and other earned but unpaid cash entitlements for the period
through and including the date of termination of Executive's
employment, including unused earned and accrued vacation pay
and unreimbursed business expenses. In addition, Executive
shall be entitled to any other benefits earned or accrued by
Executive for the period through and including the date of
termination of Executive's employment under any other employee
benefit plans and arrangements maintained by the Company, in
accordance with the terms of such plans and arrangements,
except as modified herein.
(2) All outstanding stock options held by
Executive shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control.
<PAGE> 5
- 4 -
(3) All of the Executive's rights in and to the
account under the Comair Holdings, Inc. Deferred Incentive
Compensation Plan ("Deferred Compensation Plan") shall
automatically vest in full without further action as of the
date of the Change in Control, and the Company shall pay, or
cause the trustee under the Deferred Incentive Compensation
Rabbi Trust Agreement ("Rabbi Trust Agreement") to pay
Executive a lump sum equal to Executive's account in full as
vested hereunder.
(4) The Company shall provide Executive with a
term life insurance policy and disability policy for a period
of twenty-four (24) months (with premiums pre-paid for such
period) on Executive's life, providing Executive's
beneficiaries with a death benefit and disability benefits of
an amount equal to such benefits provided by the Company
during the period prior to the Change in Control.
(5) The Company shall provide Executive and
Executive's spouse, for a period of twenty-four (24) months,
family medical insurance coverage and benefits comparable to
such insurance coverage provided to executives of the Company;
provided, however, at the election of the Executive, the
Company shall pay Executive a lump sum, in cash, equal to the
present value (as of the date of the Change in Control) of
medical insurance coverage for such period.
(6) Executive, Executive's spouse and Executive's
dependent children, for so long as they are under age 18 (or
under age 23 if a full-time student), shall be entitled to
free system-wide flight privileges on Company flights to any
location which the Company serves for a period of twenty-four
(24) months. Such privileges shall entitle Executive,
Executive's spouse and Executive's dependent children to
unlimited positive space (or space available, at Executive's
option) tickets; provided further that all of such flight
privileges shall otherwise be subject to the same conditions
and restrictions as pertain from time to time to the flight
privileges generally provided by the Company to its
executives. Nothing herein shall be deemed as a limitation
upon any flight privileges for which Executive may otherwise
qualify.
(c) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Comair
Holdings, Inc. ("Holdings"), Company or a subsidiary, or any
Holdings, Company or subsidiary's employee benefit plan
(including any trustee of such plan acting as trustee) becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
<PAGE> 6
- 5 -
Exchange Act), directly or indirectly of securities of the
Holdings or Company representing 50% or more of the combined
voting power of Holdings' or Company's then outstanding
securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not Holdings, the Company or subsidiary is then subject to
such reporting requirement;
(iii) When, during any period of 2 consecutive
years during the term of this Agreement, the individuals who,
at the beginning of such period, constitute the Board of the
Holdings, cease for any reason other than death to constitute
at least a two-thirds (2/3) majority thereof; provided,
however, that a director who was not a director at the
beginning of such period shall be deemed to have satisfied the
two-year requirement if such director was elected by, or on
the recommendation of, at least two-thirds (2/3) of the
directors who were directors at the beginning of such period
(either actually or by prior operation of this Subsection
8(c)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of Holdings or the
Company by an entity other than any subsidiary through
purchase of assets, by merger, or otherwise.
(d) If any portion of the payments hereunder or any other
payment under this Agreement, or under any other agreement with, or
plan of the Company including, but not limited to, stock options and
other long-term incentives (in the aggregate "Total Payments") would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Executive shall be
entitled to under this paragraph and Company agrees to pay a lump sum,
in cash, an additional amount such that after payment by Executive of
all of Executive's applicable Federal, state and local taxes, including
any Excise Tax, imposed upon such additional amount, Executive will
retain an amount equal to the Excise Tax imposed on the Total Payments.
For purposes of this Section 8, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking
into account the effect of any loss of personal exemptions resulting
from receipt of the additional payments hereunder.
(e) After the date of a Change in Control, the Company
shall not (other than pursuant to Section 8(b)(ii)(3) hereof) take any
steps to disturb or alter Executive's (or Executive's beneficiaries')
rights to receive amounts deferred under the Deferred
<PAGE> 7
- 6 -
Compensation Plan in accordance with such Executive's applicable
payment elections as in effect from time to time. Nothing herein or in
the Rabbi Trust Agreement shall relieve the Company of its obligation
to pay benefits under the Deferred Compensation Plan in accordance with
the terms of such Plan, to the extent such benefits are not paid under
the Rabbi Trust Agreement.
(f) In the event of a dissolution or liquidation of
Holdings or the Company or any merger (other than a merger for the
purpose of the re-domestication of Holdings or the Company not
involving a Change in Control), consolidation, exchange or other
transaction in which Holdings or the Company, respectively, is not the
surviving corporation or in which the outstanding shares of Holdings or
the Company, respectively, are converted into cash, other securities or
other property, Company shall pay to Executive or the estate or legal
representative of Executive, an amount equal to the payment due under
Sections 8(a) and 8(b) hereof upon such dissolution, liquidation,
merger, consolidation, exchange or other transaction. Executive shall
also receive all vested benefits or other amounts and benefits which
Executive is entitled to receive under any plan, policy, practice or
program of the Company at the date of such dissolution, liquidation,
merger, consolidation, exchange or other transaction in accordance with
such plan, policy, practice or program.
(g) If Executive's employment is terminated due to death
or disability, Company shall, thereafter, pay to Executive or the
estate or legal representative of Executive an amount equal to the
payment due under Section 8(a) hereof upon termination of this
Agreement. Executive shall also receive all vested benefits or other
amounts and benefits which Executive is entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to
the date of such death or disability in accordance with such plan,
policy, practice or program.
9. Termination for Cause.
(a) Anything herein to the contrary notwithstanding,
Company shall have the right to terminate Executive's employment
hereunder for cause, as such term is defined in the following section.
(b) For the purpose of this Section 9, the term "cause"
means (and shall be limited to) (i) fraud, misappropriation,
embezzlement, intentional and material damage to the property of
Company; or (ii) material breach of any of the provisions of this
Agreement described in Section 12.
(c) Upon termination of Executive's employment for cause
pursuant to this Section 9, Executive shall not, except as otherwise
required by law, be entitled to receive any
<PAGE> 8
- 7 -
further compensation other than accrued benefits under benefit plans of
the Company, including without limitation stock option, deferred
compensation, profit sharing and pension plans, if any, and shall be
completely relieved of his position as an officer of Company, its
subsidiaries and affiliates, and Executive covenants and agrees to
deliver at the termination date all resignations necessary to effect
the foregoing.
10. Disability.
(a) If, during the term of this Agreement, Executive
contracts an illness or other disability which prevents performance by
him of his duties as an executive officer for a consecutive period of
six (6) months or more, then Company, at its option, may at any time
thereafter terminate this Agreement by serving thirty (30) days'
written notice thereof on Executive and this Agreement shall terminate
and come to an end upon the date set forth in said notice as if such
date were the termination date of this Agreement. If prior to the date
specified in such notice, Executive's illness or incapacity shall have
been eliminated or corrected and Executive is physically and mentally
able to perform his duties as an executive officer and shall have taken
up and is performing such duties on a full time basis, he shall be
entitled to resume employment hereunder as though such notice had not
been given.
(b) During any period of disability and prior to the
termination of this Agreement as in this Section provided, Executive
shall continue to be paid in full by Company in accordance with the
provisions of Section 4, except that Company shall deduct from
Executive's compensation as herein provided an amount equal to any
disability insurance payments received by Executive for such period
pursuant to disability insurance policies paid for and maintained by
Company for the benefit of Executive.
(c) If there should be any dispute between the parties as
to Executive's physical or mental disability at any time, such
questions shall be settled by the majority opinion of three impartial,
reputable physicians, one of whom shall be selected by Company, another
by Executive, and the third by the two physicians selected by Company
and Executive. The certificate of two such physicians as to the matter
in dispute shall be final and binding on the parties.
(d) Upon the date of termination of this Agreement under
this Section 10 due to disability, Executive shall receive the payments
and benefits set forth in Section 8(g) hereof.
11. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
<PAGE> 9
- 8 -
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company, at or subsequent to the date of termination of Executive's
employment shall be payable in accordance with such plan, policy, practice, or
program except as expressly modified by this Agreement.
12. Confidentiality and Non-Competition.
(a) Except as otherwise required by law, rule or
regulation, court order or valid subpoena, Executive will not at any
time during the term of this Agreement or thereafter, except as
authorized by Company, knowingly divulge, furnish or make accessible to
any person, firm, corporation or other entity, any such confidential
and sensitive information and any other information not otherwise
publicly available which he presently possesses or which he may obtain
during the course of his employment with respect to the business,
customers and affairs of Company or any subsidiary or affiliate of
Company or trade secrets, developments, know-how methods or other
information and data pertaining to practices, equipment, developments
or any confidential or secret aspect of the business of Company or any
subsidiary or affiliate of Company, and that all such matters and
information shall be kept strictly and absolutely confidential.
Executive, upon termination of his employment, irrespective of the
time, manner or cause of termination, will surrender and deliver to
Company all lists, books, records and data of every kind relating to or
in connection with the business of Company or any subsidiary or
affiliate of Company, and all property belonging to Company and any
subsidiary or affiliate of Company.
(b) During the term of this Agreement and, in the event
that Executive's employment with Company is terminated for any reason
other than a Change in Control as defined in Section 8 hereof, for a
period of one (1) year after such termination, Executive shall not,
directly or indirectly, engage in or contract with others to engage in
any business enterprise, line of work, consulting contract, joint
venture or other arrangement which conducts a business or businesses
substantially similar to the business conducted by Company in any area
in which Company or any of its affiliates or subsidiaries provides or
plans to provide air transportation to the public. Executive
acknowledges that the geographic area covered hereby, and the period
and nature of the agreed restrictions are reasonable and necessary for
the protection of the business of Company. All provisions of this
paragraph concerning non-competition are severable; and while it is the
intention of the parties that all of said provisions shall be
enforceable, if any one of the same shall be held to be unenforceable
in whole or in part, the remainder shall continue to be in full force
and effect.
13. Irreparable Injury. Executive acknowledges that his compliance
with his duties and obligations under Section 12 is necessary to protect the
goodwill and other proprietary interests
<PAGE> 10
- 9 -
of Company and the purposes and essence of this Agreement. Executive
acknowledges that a breach of his duties and obligations under Section 12 will
result in irreparable and continuing damage to Company for which there will be
no adequate remedy at law; and agrees that, in the event of any breach of any of
the aforesaid duties and obligations, Company and its successors and assigns
shall be entitled to injunctive or other equitable relief and to such other and
further relief as may be proper.
14. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Executive,
Executive's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
15. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U. S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Executive, c/o Comair,
Inc., Post Office Box 75021, Greater Cincinnati International Airport,
Cincinnati, Ohio 45275, or such other address as either party may specify in a
written notice to the other party.
16. Entire Agreement and Amendment. This Agreement embodies the
entire agreement between the parties and supersedes all prior agreements,
whether written or oral, relating to the object matter herein. Any amendment
hereto shall be in writing and executed by the duly authorized representatives
of each party.
17. Choice of Law. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Kentucky.
18. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
19. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
<PAGE> 11
- 10 -
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK. SIGNATURE PAGE FOLLOWS.]
<PAGE> 12
- 11 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: COMAIR HOLDINGS, INC.
BY: /s/ David R. Mueller
- -------------------------------- --------------------------------
/s/ K. Michael Stuart
- -------------------------------- -----------------------------------
K. MICHAEL STUART
<PAGE> 1
EXHIBIT (c)(6)
EMPLOYMENT AGREEMENT OF
RANDY D. RADEMACHER
<PAGE> 2
EXHIBIT (c)(6)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is dated as of August 10, 1999
by and between COMAIR HOLDINGS, INC., a Kentucky corporation ("Company") with
its principal place of business at 2258 Tower Drive, Erlanger, Kentucky and
RANDY D. RADEMACHER ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the Commonwealth of
Kentucky and engaged in the airline business; and
WHEREAS, Company and Executive desire to enter into an employment
agreement to employ Executive as an officer of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration receipt of which is
hereby acknowledged, the parties agree as follows:
1. Employment. The Company does hereby employ Executive, subject
to the terms and conditions hereinafter contained, as an executive employee with
the title of Senior Vice President or such other executive title or titles
hereafter determined by the Board of Directors of Company, and Executive accepts
such employment upon the terms and conditions herein contained.
2. Term. The term of this Agreement shall be two (2) years, which
shall commence on August 1, 1999, and shall terminate on July 31, 2001, unless
sooner terminated in accordance with the provisions hereof; provided, however,
on July 31 of each year during the term commencing in 2001, this Agreement shall
be extended for an additional year unless either party shall give thirty (30)
days prior written notice not to automatically extend the term for an additional
year.
3. Duties and Responsibilities.
(a) Position and Responsibilities. On the terms and
subject to the conditions set forth in this Agreement, Employer shall
employ Executive to serve in an executive capacity with the Company.
Executive shall perform all duties customarily attendant to the
position of Senior Vice President of Company (or other executive
position) and shall perform such services and duties commensurate with
his position as may from time to time be prescribed by the Board of
Directors of Company (the "Board"). Executive shall perform the
services hereunder at Company's offices in Erlanger, Kentucky, and
shall do such traveling as may be reasonably required of him in the
performance of his duties.
<PAGE> 3
- 2 -
(b) Acceptance. Executive hereby accepts such employment
and agrees that throughout the period of his employment hereunder, he
will devote substantially his full business time, attention, knowledge,
and skills faithfully, diligently, and to the best of his ability, in
the furtherance of the business of Company; provided, that Executive
shall be permitted to serve on the boards of directors of such other
companies as the Board shall approve, such approval not to be
unreasonably withheld, and that Executive may make personal
investments, or act as a director and engage in other activities for
any charitable, educational or other non-profit institution, if such
investments and activities do not materially interfere with the
performance of Executive's duties hereunder.
4. Compensation. Company shall pay Executive in full payment for
any and all services rendered by him hereunder, including, without limitation,
all services as an officer of Company, its subsidiaries or affiliates, a salary
at an annual rate of Two Hundred Twenty Thousand and 00/100 Dollars ($220,000),
subject to increase (but not decrease) at the discretion of the Board of
Directors and payable in accordance with the customary payroll practices of
Company (but not less often than monthly). If Executive's salary is increased by
the Board of Directors, such increased salary shall become the minimum amount of
compensation payable to Executive under this Agreement, and will not be reduced
thereafter. Executive shall also participate in the Company's annual performance
based incentives, or any replacement or successor to such incentives, and shall
be eligible to receive bonuses thereunder in accordance with the terms thereof.
5. Additional Employment Benefits. Executive shall be entitled to
participate in all benefits made generally available by Company to its executive
officers during the period covered by this Agreement, including, without
limitation, vacations, pension plans, profit sharing plans, stock option plans,
deferred compensation plans, hospitalization insurance, health and accident
insurance, disability insurance, group term life insurance, automobile
allowances and all other fringe benefits which may be provided by Company for
its executive officers during the term of employment.
6. Indemnification. The Company shall indemnify Executive (and
Executive's legal representatives or other successors) to the fullest extent
permitted by the Certificate of Incorporation and By-Laws of the Company and the
laws of the Commonwealth of Kentucky, as in effect at such time or from time to
time, and Executive shall be entitled to the protection of any insurance
policies the Company may elect to maintain generally for the benefit of its
directors and officers (and to the extent the Company maintains such an
insurance policy or policies, Executive shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage available for any Company officer or director), against all costs,
charges and expenses whatsoever incurred or sustained by Executive or
Executive's legal representatives at the time such costs, charges and expenses
are incurred or sustained, in connection with any action, suit or proceeding to
which Executive (or Executive's legal representatives or other successors) may
be made a party by reason of Executive's being or having been a director,
officer or employee of the Company.
<PAGE> 4
- 3 -
7. Termination. Executive's rights under this Agreement shall
continue until expiration of the term under Section 2 hereof, unless prior
thereto: (i) Executive dies; (ii) Executive is dismissed without cause pursuant
to Section 8 hereof; (iii) Executive is dismissed for cause as defined in
Section 9 hereof; or (iv) Company determines that Executive has become disabled,
as provided in Section 10 hereof.
8. Early Termination.
(a) Notwithstanding anything to the contrary herein, the
Company shall have the right at any time, at its sole option, to
terminate Executive's employment hereunder without cause upon thirty
(30) days' prior written notice; provided, however, if the Company
delivers notice that Executive's employment is terminated pursuant to
this Section 8(a) or delivers notice not to automatically extend the
term pursuant to Section 2 hereof, Company shall pay Executive, and
Executive shall accept in full satisfaction of Company's obligations
under this Agreement, an amount, payable in a lump sum payment promptly
upon termination, equal to two (2) times the sum of (i) the annual base
salary in effect at the termination date, plus (ii) the average annual
bonus compensation payable to Executive during the prior three (3)
fiscal years and (iii) the average annual award under the Deferred
Compensation Plan (as hereinafter defined) during the prior three (3)
fiscal years.
(b) In the event of a "change in control" of the Company
(as hereinafter defined), (i) this Agreement shall be deemed terminated
as of the date of the Change in Control, and the Company shall pay to
Executive the payment required under Section 8(a) hereof ; and (ii) the
Executive shall be entitled to receive from the Company the following
additional benefits:
(1) The Company shall pay Executive a lump sum,
in cash, equal to Executive's earned but unpaid base salary
and other earned but unpaid cash entitlements for the period
through and including the date of termination of Executive's
employment, including unused earned and accrued vacation pay
and unreimbursed business expenses. In addition, Executive
shall be entitled to any other benefits earned or accrued by
Executive for the period through and including the date of
termination of Executive's employment under any other employee
benefit plans and arrangements maintained by the Company, in
accordance with the terms of such plans and arrangements,
except as modified herein.
(2) All outstanding stock options held by
Executive shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control.
<PAGE> 5
- 4 -
(3) All of the Executive's rights in and to the
account under the Comair Holdings, Inc. Deferred Incentive
Compensation Plan ("Deferred Compensation Plan") shall
automatically vest in full without further action as of the
date of the Change in Control, and the Company shall pay, or
cause the trustee under the Deferred Incentive Compensation
Rabbi Trust Agreement ("Rabbi Trust Agreement") to pay
Executive a lump sum equal to Executive's account in full as
vested hereunder.
(4) The Company shall provide Executive with a
term life insurance policy and disability policy for a period
of twenty-four (24) months (with premiums pre-paid for such
period) on Executive's life, providing Executive's
beneficiaries with a death benefit and disability benefits of
an amount equal to such benefits provided by the Company
during the period prior to the Change in Control.
(5) The Company shall provide Executive and
Executive's spouse, for a period of twenty-four (24) months,
family medical insurance coverage and benefits comparable to
such insurance coverage provided to executives of the Company;
provided, however, at the election of the Executive, the
Company shall pay Executive a lump sum, in cash, equal to the
present value (as of the date of the Change in Control) of
medical insurance coverage for such period.
(6) Executive, Executive's spouse and Executive's
dependent children, for so long as they are under age 18 (or
under age 23 if a full-time student), shall be entitled to
free system-wide flight privileges on Company flights to any
location which the Company serves for a period of twenty-four
(24) months. Such privileges shall entitle Executive,
Executive's spouse and Executive's dependent children to
unlimited positive space (or space available, at Executive's
option) tickets; provided further that all of such flight
privileges shall otherwise be subject to the same conditions
and restrictions as pertain from time to time to the flight
privileges generally provided by the Company to its
executives. Nothing herein shall be deemed as a limitation
upon any flight privileges for which Executive may otherwise
qualify.
(c) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Company or a
subsidiary, or any Company or subsidiary's employee benefit
plan (including any trustee of such plan acting as trustee)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities
<PAGE> 6
- 5 -
of the Company or Comair, Inc., ("Comair") representing 50% or
more of the combined voting power of the Company's or Comair's
then outstanding securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not the Company or subsidiary is then subject to such
reporting requirement;
(iii) When, during any period of 2 consecutive
years during the term of this Agreement, the individuals who,
at the beginning of such period, constitute the Board of the
Company, cease for any reason other than death to constitute
at least a two-thirds (2/3) majority thereof; provided,
however, that a director who was not a director at the
beginning of such period shall be deemed to have satisfied the
two-year requirement if such director was elected by, or on
the recommendation of, at least two-thirds (2/3) of the
directors who were directors at the beginning of such period
(either actually or by prior operation of this Subsection
8(c)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company or
Comair by an entity other than any subsidiary through purchase
of assets, by merger, or otherwise.
(d) If any portion of the payments hereunder or any other
payment under this Agreement, or under any other agreement with, or
plan of the Company, including but not limited to stock options and
other long-term incentives (in the aggregate "Total Payments") would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Executive shall be
entitled under this paragraph and Company agrees to pay a lump sum, in
cash, an additional amount such that after payment by Executive of all
of Executive's applicable Federal, state and local taxes, including any
Excise Tax, imposed upon such additional amount, Executive will retain
an amount equal to the Excise Tax imposed on the Total Payments. For
purposes of this Section 8, Executive's applicable Federal, state and
local taxes shall be computed at the maximum marginal rates, taking
into account the effect of any loss of personal exemptions resulting
from receipt of the additional payments hereunder.
(e) After the date of a Change in Control, the Company
shall not (other than pursuant to Section 8(b)(ii)(3) hereof) take any
steps to disturb or alter Executive's (or Executive's beneficiaries')
rights to receive amounts deferred under the Deferred Compensation Plan
in accordance with such Executive's applicable payment elections as in
effect from time to time. Nothing herein or in the Rabbi Trust
Agreement shall relieve the
<PAGE> 7
- 6 -
Company of its obligation to pay benefits under the Deferred
Compensation Plan in accordance with the terms of such Plan, to the
extent such benefits are not paid under the Rabbi Trust Agreement.
(f) In the event of a dissolution or liquidation of the
Company or Comair or any merger (other than a merger for the purpose of
the re-domestication of the Company or Comair not involving a Change in
Control), consolidation, exchange or other transaction in which the
Company or Comair, respectively is not the surviving corporation or in
which the outstanding shares of the Company or Comair, respectively are
converted into cash, other securities or other property, Company shall
pay to Executive or the estate or legal representative of Executive, an
amount equal to the payment due under Sections 8(a) and 8(b) hereof
upon such dissolution, liquidation, merger, consolidation, exchange or
other transaction. Executive shall also receive all vested benefits or
other amounts and benefits which Executive is entitled to receive under
any plan, policy, practice or program of the Company at the date of
such dissolution, liquidation, merger, consolidation, exchange or other
transaction in accordance with such plan, policy, practice or program.
(g) If Executive's employment is terminated due to death
or disability, Company shall, thereafter, pay to Executive or the
estate or legal representative of Executive an amount equal to the
payment due under Section 8(a) hereof upon termination of this
Agreement. Executive shall also receive all vested benefits or other
amounts and benefits which Executive is entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to
the date of such death or disability in accordance with such plan,
policy, practice or program.
9. Termination for Cause.
(a) Anything herein to the contrary notwithstanding,
Company shall have the right to terminate Executive's employment
hereunder for cause, as such term is defined in the following section.
(b) For the purpose of this Section 9, the term "cause"
means (and shall be limited to) (i) fraud, misappropriation,
embezzlement, intentional and material damage to the property of
Company; or (ii) material breach of any of the provisions of this
Agreement described in Section 12.
(c) Upon termination of Executive's employment for cause
pursuant to this Section 9, Executive shall not, except as otherwise
required by law, be entitled to receive any further compensation other
than accrued benefits under benefit plans of the Company, including
without limitation stock option, deferred compensation, profit sharing
and pension plans, if any, and shall be completely relieved of his
position as an officer of Company, its
<PAGE> 8
- 7 -
subsidiaries and affiliates, and Executive covenants and agrees to
deliver at the termination date all resignations necessary to effect
the foregoing.
10. Disability.
(a) If, during the term of this Agreement, Executive
contracts an illness or other disability which prevents performance by
him of his duties as an executive officer for a consecutive period of
six (6) months or more, then Company at its option, may at any time
thereafter terminate this Agreement by serving thirty (30) days written
notice thereof on Executive and this Agreement shall terminate and come
to an end upon the date set forth in said notice as if such date were
the termination date of this Agreement. If prior to the date specified
in such notice, Executive's illness or incapacity shall have been
eliminated or corrected and Executive is physically and mentally able
to perform his duties as an executive officer and shall have taken up
and is performing such duties on a full time basis, he shall be
entitled to resume employment hereunder as though such notice had not
been given.
(b) During any period of disability and prior to the
termination of this Agreement as in this Section provided, Executive
shall continue to be paid in full by Company in accordance with the
provisions of Section 4, except that Company shall deduct from
Executive's compensation as herein provided an amount equal to any
disability insurance payments received by Executive for such period
pursuant to disability insurance policies paid for and maintained by
Company for the benefit of Executive.
(c) If there should be any dispute between the parties as
to Executive's physical or mental disability at any time, such
questions shall be settled by the majority opinion of three impartial,
reputable physicians, one of whom shall be selected by Company, another
by Executive, and the third by the two physicians selected by Company
and Executive. The certificate of two such physicians as to the matter
in dispute shall be final and binding on the parties.
(d) Upon the date of termination of this Agreement under
this Section 10 due to disability, Executive shall receive the payments
and benefits set forth in Section 8(g) hereof.
11. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company, at or subsequent to the date of termination of
<PAGE> 9
- 8 -
Executive's employment shall be payable in accordance with such plan, policy,
practice, or program except as expressly modified by this Agreement.
12. Confidentiality and Non-Competition.
(a) Except as otherwise required by law, rule or
regulation, court order or valid subpoena, Executive will not at any
time during the term of this Agreement or thereafter, except as
authorized by Company, knowingly divulge, furnish or make accessible to
any person, firm, corporation or other entity, any such confidential
and sensitive information and any other information not otherwise
publicly available which he presently possesses or which he may obtain
during the course of his employment with respect to the business,
customers and affairs of Company or any subsidiary or affiliate of
Company or trade secrets, developments, know-how methods or other
information and data pertaining to practices, equipment, developments
or any confidential or secret aspect of the business of Company or any
subsidiary or affiliate of Company, and that all such matters and
information shall be kept strictly and absolutely confidential.
Executive, upon termination of his employment, irrespective of the
time, manner or cause of termination, will surrender and deliver to
Company all lists, books, records and data of every kind relating to or
in connection with the business of Company or any subsidiary or
affiliate of Company, and all property belonging to Company and any
subsidiary or affiliate of Company.
(b) During the term of this Agreement and, in the event
that Executive's employment with Company is terminated for any reason
other than a Change in Control as defined in Section 8 hereof, for a
period of one (1) year after such termination, Executive shall not,
directly or indirectly, engage in or contract with others to engage in
any business enterprise, line of work, consulting contract, joint
venture or other arrangement which conducts a business or businesses
substantially similar to the business conducted by Company in any area
in which Company or any of its affiliates or subsidiaries provides or
plans to provide air transportation to the public. Executive
acknowledges that the geographic area covered hereby, and the period
and nature of the agreed restrictions are reasonable and necessary for
the protection of the business of Company. All provisions of this
paragraph concerning non-competition are severable; and while it is the
intention of the parties that all of said provisions shall be
enforceable, if any one of the same shall be held to be unenforceable
in whole or in part, the remainder shall continue to be in full force
and effect.
13. Irreparable Injury. Executive acknowledges that his compliance
with his duties and obligations under Section 12 is necessary to protect the
goodwill and other proprietary interests of Company and the purposes and essence
of this Agreement. Executive acknowledges that a breach of his duties and
obligations under Section 12 will result in irreparable and continuing damage to
Company for which there will be no adequate remedy at law; and agrees that, in
the event of any
<PAGE> 10
- 9 -
breach of any of the aforesaid duties and obligations, Company and its
successors and assigns shall be entitled to injunctive or other equitable relief
and to such other and further relief as may be proper.
14. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Executive,
Executive's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
15. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U. S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Executive, c/o Comair
Holdings, Inc., Post Office Box 75021, Greater Cincinnati International Airport,
Cincinnati, Ohio 45275, or such other address as either party may specify in a
written notice to the other party.
16. Entire Agreement and Amendment. This Agreement embodies the
entire agreement between the parties and supersedes all prior agreements,
whether written or oral, relating to the object matter herein. Any amendment
hereto shall be in writing and executed by the duly authorized representatives
of each party.
17. Choice of Law. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Kentucky.
18. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
19. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK. SIGNATURE PAGE FOLLOWS.]
<PAGE> 11
- 10 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: COMAIR HOLDINGS, INC.
BY: /s/ David R. Mueller
- -------------------------------- --------------------------------
/s/ Randy D. Rademacher
- -------------------------------- -----------------------------------
RANDY D. RADEMACHER
<PAGE> 1
EXHIBIT (c)(7)
EMPLOYMENT AGREEMENT
OF LINDA E. NOBLE
<PAGE> 2
EXHIBIT (c)(7)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is dated as of August 10, 1999,
by and between COMAIR, INC., an Ohio corporation ("Company"), with its principal
place of business at 2258 Tower Drive, Erlanger, Kentucky, and LINDA E. NOBLE
("Executive").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the State of Ohio
and engaged in the airline business; and
WHEREAS, Company and Executive desire to enter into an employment
agreement to employ Executive as an officer of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration receipt of which is
hereby acknowledged, the parties agree as follows:
1. Employment. The Company does hereby employ Executive, subject
to the terms and conditions hereinafter contained, as an executive employee with
the title of Senior Vice President or such other executive title or titles
hereafter determined by the Board of Directors of Company, and Executive accepts
such employment upon the terms and conditions herein contained.
2. Term. The term of this Agreement shall be two (2) years, which
shall commence on August 1, 1999, and shall terminate on July 31, 2001, unless
sooner terminated in accordance with the provisions hereof; provided, however,
on July 31 of each year during the term commencing in 2001, this Agreement shall
be extended for an additional year unless either party shall give thirty (30)
days' prior written notice not to automatically extend the term for an
additional year.
3. Duties and Responsibilities.
(a) Position and Responsibilities. On the terms and
subject to the conditions set forth in this Agreement, Employer shall
employ Executive to serve in an executive capacity with the Company.
Executive shall perform all duties customarily attendant to the
position of Senior Vice President of Company (or other executive
position) and shall perform such services and duties commensurate with
her position as may from time to time be prescribed by the Board of
Directors of Company (the "Board"). Executive shall perform the
services hereunder at Company's offices in Erlanger, Kentucky, and
shall do such traveling as may be reasonably required of her in the
performance of her duties.
(b) Acceptance. Executive hereby accepts such employment
and agrees that throughout the period of her employment hereunder, she
will devote substantially her full
<PAGE> 3
- 2 -
business time, attention, knowledge, and skills faithfully, diligently,
and to the best of her ability, in the furtherance of the business of
Company; provided, that Executive shall be permitted to serve on the
boards of directors of such other companies as the Board shall approve,
such approval not to be unreasonably withheld, and that Executive may
make personal investments, or act as a director and engage in other
activities for any charitable, educational or other non-profit
institution, if such investments and activities do not materially
interfere with the performance of Executive's duties hereunder.
4. Compensation. Company shall pay Executive in full payment for
any and all services rendered by her hereunder, including, without limitation,
all services as an officer of Company, its subsidiaries or affiliates, a salary
at an annual rate of One Hundred Ninety Thousand and 00/100 Dollars ($190,000),
subject to increase (but not decrease) at the discretion of the Board of
Directors and payable in accordance with the customary payroll practices of
Company (but not less often than monthly). If Executive's salary is increased by
the Board of Directors, such increased salary shall become the minimum amount of
compensation payable to Executive under this Agreement, and will not be reduced
thereafter. Executive shall also participate in the Company's (or Holdings')
annual performance based incentives, or any replacement or successor to such
incentives, and shall be eligible to receive bonuses thereunder in accordance
with the terms thereof.
5. Additional Employment Benefits. Executive shall be entitled to
participate in all benefits made generally available by Company to its executive
officers during the period covered by this Agreement including, without
limitation, vacations, pension plans, profit sharing plans, stock option plans,
deferred compensation plans, hospitalization insurance, health and accident
insurance, disability insurance, group term life insurance, automobile
allowances and all other fringe benefits which may be provided by Company for
its executive officers during the term of employment.
6. Indemnification. The Company shall indemnify Executive (and
Executive's legal representatives or other successors) to the fullest extent
permitted by the Articles of Incorporation and Code of Regulations of the
Company and the laws of the State of Ohio, as in effect at such time or from
time to time, and Executive shall be entitled to the protection of any insurance
policies the Company or Holdings may elect to maintain generally for the benefit
of its directors and officers (and to the extent the Company or Holdings
maintains such an insurance policy or policies, Executive shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company officer or director), against
all costs, charges and expenses whatsoever incurred or sustained by Executive or
Executive's legal representatives at the time such costs, charges and expenses
are incurred or sustained, in connection with any action, suit or proceeding to
which Executive (or Executive's legal representatives or other successors) may
be made a party by reason of Executive's being or having been a director,
officer or employee of the Company.
<PAGE> 4
- 3 -
7. Termination. Executive's rights under this Agreement shall
continue until expiration of the term under Section 2 hereof, unless prior
thereto: (i) Executive dies; (ii) Executive is dismissed without cause pursuant
to Section 8 hereof; (iii) Executive is dismissed for cause as defined in
Section 9 hereof; or (iv) Company determines that Executive has become disabled,
as provided in Section 10 hereof.
8. Early Termination.
(a) Notwithstanding anything to the contrary herein, the
Company shall have the right at any time, at its sole option, to
terminate Executive's employment hereunder without cause upon thirty
(30) days' prior written notice; provided, however, if the Company
delivers notice that Executive's employment is terminated pursuant to
this Section 8(a) or delivers notice not to automatically extend the
term pursuant to Section 2 hereof, Company shall pay Executive, and
Executive shall accept in full satisfaction of Company's obligations
under this Agreement, an amount, payable in a lump sum payment promptly
upon termination, equal to two (2) times the sum of (i) the annual base
salary in effect at the termination date, plus (ii) the average annual
bonus compensation payable to Executive during the prior three (3)
fiscal years, and (iii) the average annual award under the Deferred
Compensation Plan (as hereinafter defined) during the prior three (3)
fiscal years.
(b) In the event of a "change in control" of the Company
(as hereinafter defined), (i) this Agreement shall be deemed terminated
as of the date of the Change in Control, and the Company shall pay to
Executive the payment required under Section 8(a) hereof; and (ii) the
Executive shall be entitled to receive from the Company the following
additional benefits:
(1) The Company shall pay Executive a lump sum,
in cash, equal to Executive's earned but unpaid base salary
and other earned but unpaid cash entitlements for the period
through and including the date of termination of Executive's
employment, including unused earned and accrued vacation pay
and unreimbursed business expenses. In addition, Executive
shall be entitled to any other benefits earned or accrued by
Executive for the period through and including the date of
termination of Executive's employment under any other employee
benefit plans and arrangements maintained by the Company, in
accordance with the terms of such plans and arrangements,
except as modified herein.
(2) All outstanding stock options held by
Executive shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control.
<PAGE> 5
- 4 -
(3) All of the Executive's rights in and to the
account under the Comair Holdings, Inc. Deferred Incentive
Compensation Plan ("Deferred Compensation Plan") shall
automatically vest in full without further action as of the
date of the Change in Control, and the Company shall pay, or
cause the trustee under the Deferred Incentive Compensation
Rabbi Trust Agreement ("Rabbi Trust Agreement") to pay
Executive a lump sum equal to Executive's account in full as
vested hereunder.
(4) The Company shall provide Executive with a
term life insurance policy and disability policy for a period
of twenty-four (24) months (with premiums pre-paid for such
period) on Executive's life, providing Executive's
beneficiaries with a death benefit and disability benefits of
an amount equal to such benefits provided by the Company
during the period prior to the Change in Control.
(5) The Company shall provide Executive and
Executive's spouse, for a period of twenty-four (24) months,
family medical insurance coverage and benefits comparable to
such insurance coverage provided to executives of the Company;
provided, however, at the election of the Executive, the
Company shall pay Executive a lump sum, in cash, equal to the
present value (as of the date of the Change in Control) of
medical insurance coverage for such period.
(6) Executive, Executive's spouse and Executive's
dependent children, for so long as they are under age 18 (or
under age 23 if a full-time student), shall be entitled to
free system-wide flight privileges on Company flights to any
location which the Company serves for a period of twenty-four
(24) months. Such privileges shall entitle Executive,
Executive's spouse and Executive's dependent children to
unlimited positive space (or space available, at Executive's
option) tickets; provided further that all of such flight
privileges shall otherwise be subject to the same conditions
and restrictions as pertain from time to time to the flight
privileges generally provided by the Company to its
executives. Nothing herein shall be deemed as a limitation
upon any flight privileges for which Executive may otherwise
qualify.
(c) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Comair
Holdings, Inc. ("Holdings"), Company or a subsidiary, or any
Holdings, Company or subsidiary's employee benefit plan
(including any trustee of such plan acting as trustee) becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
<PAGE> 6
- 5 -
Exchange Act), directly or indirectly of securities of the
Holdings or Company representing 50% or more of the combined
voting power of Holdings' or Company's then outstanding
securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not Holdings, the Company or subsidiary is then subject to
such reporting requirement;
(iii) When, during any period of 2 consecutive
years during the term of this Agreement, the individuals who,
at the beginning of such period, constitute the Board of the
Holdings, cease for any reason other than death to constitute
at least a two-thirds (2/3) majority thereof; provided,
however, that a director who was not a director at the
beginning of such period shall be deemed to have satisfied the
two-year requirement if such director was elected by, or on
the recommendation of, at least two-thirds (2/3) of the
directors who were directors at the beginning of such period
(either actually or by prior operation of this Subsection
8(c)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of Holdings or the
Company by an entity other than any subsidiary through
purchase of assets, by merger, or otherwise.
(d) If any portion of the payments hereunder or any other
payment under this Agreement, or under any other agreement with, or
plan of the Company including, but not limited to, stock options and
other long-term incentives (in the aggregate "Total Payments") would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Executive shall be
entitled to under this paragraph and Company agrees to pay a lump sum,
in cash, an additional amount such that after payment by Executive of
all of Executive's applicable Federal, state and local taxes, including
any Excise Tax, imposed upon such additional amount, Executive will
retain an amount equal to the Excise Tax imposed on the Total Payments.
For purposes of this Section 8, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking
into account the effect of any loss of personal exemptions resulting
from receipt of the additional payments hereunder.
(e) After the date of a Change in Control, the Company
shall not (other than pursuant to Section 8(b)(ii)(3) hereof) take any
steps to disturb or alter Executive's (or Executive's beneficiaries')
rights to receive amounts deferred under the Deferred
<PAGE> 7
- 6 -
Compensation Plan in accordance with such Executive's applicable
payment elections as in effect from time to time. Nothing herein or in
the Rabbi Trust Agreement shall relieve the Company of its obligation
to pay benefits under the Deferred Compensation Plan in accordance with
the terms of such Plan, to the extent such benefits are not paid under
the Rabbi Trust Agreement.
(f) In the event of a dissolution or liquidation of
Holdings or the Company or any merger (other than a merger for the
purpose of the re-domestication of Holdings or the Company not
involving a Change in Control), consolidation, exchange or other
transaction in which Holdings or the Company, respectively, is not the
surviving corporation or in which the outstanding shares of Holdings or
the Company, respectively, are converted into cash, other securities or
other property, Company shall pay to Executive or the estate or legal
representative of Executive, an amount equal to the payment due under
Sections 8(a) and 8(b) hereof upon such dissolution, liquidation,
merger, consolidation, exchange or other transaction. Executive shall
also receive all vested benefits or other amounts and benefits which
Executive is entitled to receive under any plan, policy, practice or
program of the Company at the date of such dissolution, liquidation,
merger, consolidation, exchange or other transaction in accordance with
such plan, policy, practice or program.
(g) If Executive's employment is terminated due to death
or disability, Company shall, thereafter, pay to Executive or the
estate or legal representative of Executive an amount equal to the
payment due under Section 8(a) hereof upon termination of this
Agreement. Executive shall also receive all vested benefits or other
amounts and benefits which Executive is entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to
the date of such death or disability in accordance with such plan,
policy, practice or program.
9. Termination for Cause.
(a) Anything herein to the contrary notwithstanding,
Company shall have the right to terminate Executive's employment
hereunder for cause, as such term is defined in the following section.
(b) For the purpose of this Section 9, the term "cause"
means (and shall be limited to) (i) fraud, misappropriation,
embezzlement, intentional and material damage to the property of
Company; or (ii) material breach of any of the provisions of this
Agreement described in Section 12.
(c) Upon termination of Executive's employment for cause
pursuant to this Section 9, Executive shall not, except as otherwise
required by law, be entitled to receive any
<PAGE> 8
- 7 -
further compensation other than accrued benefits under benefit plans of
the Company, including without limitation stock option, deferred
compensation, profit sharing and pension plans, if any, and shall be
completely relieved of her position as an officer of Company, its
subsidiaries and affiliates, and Executive covenants and agrees to
deliver at the termination date all resignations necessary to effect
the foregoing.
10. Disability.
(a) If, during the term of this Agreement, Executive
contracts an illness or other disability which prevents performance by
her of her duties as an executive officer for a consecutive period of
six (6) months or more, then Company, at its option, may at any time
thereafter terminate this Agreement by serving thirty (30) days'
written notice thereof on Executive and this Agreement shall terminate
and come to an end upon the date set forth in said notice as if such
date were the termination date of this Agreement. If prior to the date
specified in such notice, Executive's illness or incapacity shall have
been eliminated or corrected and Executive is physically and mentally
able to perform her duties as an executive officer and shall have taken
up and is performing such duties on a full time basis, she shall be
entitled to resume employment hereunder as though such notice had not
been given.
(b) During any period of disability and prior to the
termination of this Agreement as in this Section provided, Executive
shall continue to be paid in full by Company in accordance with the
provisions of Section 4, except that Company shall deduct from
Executive's compensation as herein provided an amount equal to any
disability insurance payments received by Executive for such period
pursuant to disability insurance policies paid for and maintained by
Company for the benefit of Executive.
(c) If there should be any dispute between the parties as
to Executive's physical or mental disability at any time, such
questions shall be settled by the majority opinion of three impartial,
reputable physicians, one of whom shall be selected by Company, another
by Executive, and the third by the two physicians selected by Company
and Executive. The certificate of two such physicians as to the matter
in dispute shall be final and binding on the parties.
(d) Upon the date of termination of this Agreement under
this Section 10 due to disability, Executive shall receive the payments
and benefits set forth in Section 8(g) hereof.
11. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
<PAGE> 9
- 8 -
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company, at or subsequent to the date of termination of Executive's
employment shall be payable in accordance with such plan, policy, practice, or
program except as expressly modified by this Agreement.
12. Confidentiality and Non-Competition.
(a) Except as otherwise required by law, rule or
regulation, court order or valid subpoena, Executive will not at any
time during the term of this Agreement or thereafter, except as
authorized by Company, knowingly divulge, furnish or make accessible to
any person, firm, corporation or other entity, any such confidential
and sensitive information and any other information not otherwise
publicly available which she presently possesses or which she may
obtain during the course of her employment with respect to the
business, customers and affairs of Company or any subsidiary or
affiliate of Company or trade secrets, developments, know-how methods
or other information and data pertaining to practices, equipment,
developments or any confidential or secret aspect of the business of
Company or any subsidiary or affiliate of Company, and that all such
matters and information shall be kept strictly and absolutely
confidential. Executive, upon termination of her employment,
irrespective of the time, manner or cause of termination, will
surrender and deliver to Company all lists, books, records and data of
every kind relating to or in connection with the business of Company or
any subsidiary or affiliate of Company, and all property belonging to
Company and any subsidiary or affiliate of Company.
(b) During the term of this Agreement and, in the event
that Executive's employment with Company is terminated for any reason
other than a Change in Control as defined in Section 8 hereof, for a
period of one (1) year after such termination, Executive shall not,
directly or indirectly, engage in or contract with others to engage in
any business enterprise, line of work, consulting contract, joint
venture or other arrangement which conducts a business or businesses
substantially similar to the business conducted by Company in any area
in which Company or any of its affiliates or subsidiaries provides or
plans to provide air transportation to the public. Executive
acknowledges that the geographic area covered hereby, and the period
and nature of the agreed restrictions are reasonable and necessary for
the protection of the business of Company. All provisions of this
paragraph concerning non-competition are severable; and while it is the
intention of the parties that all of said provisions shall be
enforceable, if any one of the same shall be held to be unenforceable
in whole or in part, the remainder shall continue to be in full force
and effect.
13. Irreparable Injury. Executive acknowledges that her compliance
with her duties and obligations under Section 12 is necessary to protect the
goodwill and other proprietary interests
<PAGE> 10
- 9 -
of Company and the purposes and essence of this Agreement. Executive
acknowledges that a breach of her duties and obligations under Section 12 will
result in irreparable and continuing damage to Company for which there will be
no adequate remedy at law; and agrees that, in the event of any breach of any of
the aforesaid duties and obligations, Company and its successors and assigns
shall be entitled to injunctive or other equitable relief and to such other and
further relief as may be proper.
14. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Executive,
Executive's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
15. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U. S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Executive, c/o Comair,
Inc., Post Office Box 75021, Greater Cincinnati International Airport,
Cincinnati, Ohio 45275, or such other address as either party may specify in a
written notice to the other party.
16. Entire Agreement and Amendment. This Agreement embodies the
entire agreement between the parties and supersedes all prior agreements,
whether written or oral, relating to the object matter herein. Any amendment
hereto shall be in writing and executed by the duly authorized representatives
of each party.
17. Choice of Law. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Kentucky.
18. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
19. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
<PAGE> 11
- 10 -
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK. SIGNATURE PAGE FOLLOWS.]
<PAGE> 12
- 11 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: COMAIR HOLDINGS, INC.
BY: /s/ David R. Mueller
- -------------------------------- --------------------------------
/s/ Linda E. Noble
- -------------------------------- -----------------------------------
LINDA E. NOBLE
<PAGE> 1
EXHIBIT (c)(8)
NON-EMPLOYEE DIRECTOR AGREEMENT
OF PETER H. FORSTER
<PAGE> 2
EXHIBIT (c)(8)
AGREEMENT
THIS AGREEMENT ("Agreement") is dated as of August 10, 1999, by and
between COMAIR HOLDINGS, INC., a Kentucky corporation ("Company"), and PETER H.
FORSTER ("Director").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the Commonwealth of
Kentucky and engaged in the airline business; and Director has been an active
and loyal director of the Company for a period of years which has contributed to
its success; and
WHEREAS, Company desires to provide for the additional service and
added responsibilities which may be involved in future service involving a
change in control (as hereinafter defined) and encourage the continuation of
the service of the Director for and on behalf of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Director. The Director shall serve as a director of the Company for
the remainder of his current term of office, and each additional term for which
such Director is nominated by the Board of Directors and elected to serve by the
shareholders of the Company.
2. Change in Control.
(a) In the event of a "change in control" of the
Company (as hereinafter defined) during Director's service as a
director of the Company, the Director shall be entitled to receive from
the Company the following payments and benefits:
(i) The Company shall pay Director a lump sum
in cash, equal to Director's earned but unpaid director's fees
for the period through and including the date of the Change in
Control.
(ii) The Company shall pay Director an amount
equal to five (5) times the annual director's fees, including
fees for meetings and as chairman of any committees, in effect
as of the date of the Change in Control.
(iii) Director and Director's spouse, for the
remainder of their respective lives, and Director's dependent
children, for so long as they are under age 18 (or
<PAGE> 3
- 2 -
under age 23 if a full-time student) shall be entitled to free
system-wide flight privileges on Company flights to any
location which the Company serves. Such privileges shall
entitle Director, Director's spouse and Director's dependent
children to unlimited positive space (or space available, at
Director's option) tickets; provided, further, that all of
such flight privileges shall otherwise be subject to the same
conditions and restrictions as pertain from time to time to
the flight privileges generally provided by the Company to its
executive employees. Nothing herein shall be deemed as a
limitation upon any flight privileges for which Director may
otherwise qualify.
(b) A "Change in Control" means the occurrence of any of the
following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Company or a
subsidiary, or any Company or subsidiary's employee benefit
plan (including any trustee of such plan acting as trustee)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the
Company or Comair, Inc., ("Comair") representing fifty percent
(50%) or more of the combined voting power of the Company's or
Comair's then outstanding securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not the Company or subsidiary is then subject to such
reporting requirement;
(iii) When, during any period of two (2)
consecutive years during the term of this Agreement, the
individuals who, at the beginning of such period, constitute
the Board of the Company, cease for any reason other than
death to constitute at least a two-thirds (2/3) majority
thereof; provided, however, that a director who was not a
director at the beginning of such period shall be deemed to
have satisfied the two-year requirement if such director was
elected by, or on the recommendation of, at least two-thirds
(2/3) of the directors who were directors at the beginning of
such period (either actually or by prior operation of this
Subsection 2.(b)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company or
Comair by an entity other than any subsidiary through purchase
of assets, by merger, or otherwise.
<PAGE> 4
- 3 -
3. Non-Exclusivity of Benefits. Unless specifically provided herein,
neither the provisions of this Agreement nor the benefits provided hereunder
shall reduce any amounts otherwise payable, or in any way diminish Director's
rights as a director of the Company, whether existing now or hereafter, under
any compensation and/or benefit plans (qualified or nonqualified), programs,
policies, or practices including, without limitation, directors' and officers'
insurance coverage provided by the Company for which Director may qualify.
Vested benefits or other amounts which Director is otherwise entitled to receive
under any plan, policy, practice, or program of the Company, at or subsequent to
the date of termination of Director's service shall be payable in accordance
with such plan, policy, practice, or program except as expressly modified by
this Agreement.
4. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Director,
Director's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
5. Notice. Any notice required or permitted hereunder shall be given in
writing and delivered to the other party by U.S. registered or certified mail;
if to Company, at Post Office Box 75021, Greater Cincinnati International
Airport, Cincinnati, Ohio 45275; if to Director, at c/o DPL, Inc., MacGregor
Park, 1065 Woodman Drive, Dayton, Ohio 45432, or such other address as either
party may specify in a written notice to the other party.
6. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky.
7. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
8. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
Remainder of this page intentionally left blank. Signature page follows.
<PAGE> 5
- 4 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESSES: COMAIR HOLDINGS, INC.
- -------------------------------------- By: /s/ David R. Mueller
------------------------------
Its: CEO
- -------------------------------------- /s/ Peter H. Forster
----------------------------------
PETER H. FORSTER
<PAGE> 1
EXHIBIT(c)(9)
NON-EMPLOYEE DIRECTOR AGREEMENT
OF JOHN A. HAAS
<PAGE> 2
EXHIBIT(c)(9)
AGREEMENT
THIS AGREEMENT ("Agreement") is dated as of August 10, 1999, by and
between COMAIR HOLDINGS, INC., a Kentucky corporation ("Company"), and JOHN A.
HAAS ("Director").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the Commonwealth of
Kentucky and engaged in the airline business; and Director has been an active
and loyal director of the Company for a period of years which has contributed to
its success; and
WHEREAS, Company desires to provide for the additional service and
added responsibilities which may be involved in future service involving a
change in control (as hereinafter defined ) and encourage the continuation of
the service of the Director for and on behalf of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Director. The Director shall serve as a director of the
Company for the remainder of his current term of office, and each additional
term for which such Director is nominated by the Board of Directors and elected
to serve by the shareholders of the Company.
2. Change in Control.
(a) In the event of a "change in control" of the Company
(as hereinafter defined) during Director's service as a director of the
Company, the Director shall be entitled to receive from the Company the
following payments and benefits:
(i) The Company shall pay Director a lump sum in
cash, equal to Director's earned but unpaid director's fees
for the period through and including the date of the Change in
Control.
(ii) The Company shall pay Director an amount
equal to five (5) times the annual director's fees, including
fees for meetings and as chairman of any committees, in effect
as of the date of the Change in Control.
(iii) Director and Director's spouse, for the
remainder of their respective lives, and Director's dependent
children, for so long as they are under age 18 (or
<PAGE> 3
- 2 -
under age 23 if a full-time student) shall be entitled to free
system-wide flight privileges on Company flights to any
location which the Company serves. Such privileges shall
entitle Director, Director's spouse and Director's dependent
children to unlimited positive space (or space available, at
Director's option) tickets; provided, further, that all of
such flight privileges shall otherwise be subject to the same
conditions and restrictions as pertain from time to time to
the flight privileges generally provided by the Company to its
executive employees. Nothing herein shall be deemed as a
limitation upon any flight privileges for which Director may
otherwise qualify.
(b) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Company or a
subsidiary, or any Company or subsidiary's employee benefit
plan (including any trustee of such plan acting as trustee)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the
Company or Comair, Inc., ("Comair") representing fifty percent
(50%) or more of the combined voting power of the Company's or
Comair's then outstanding securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not the Company or subsidiary is then subject to such
reporting requirement;
(iii) When, during any period of two (2)
consecutive years during the term of this Agreement, the
individuals who, at the beginning of such period, constitute
the Board of the Company, cease for any reason other than
death to constitute at least a two-thirds (2/3) majority
thereof; provided, however, that a director who was not a
director at the beginning of such period shall be deemed to
have satisfied the two-year requirement if such director was
elected by, or on the recommendation of, at least two-thirds
(2/3) of the directors who were directors at the beginning of
such period (either actually or by prior operation of this
Subsection 2.(b)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company or
Comair by an entity other than any subsidiary through purchase
of assets, by merger, or otherwise.
<PAGE> 4
- 3 -
3. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Director's rights as a director of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices including, without limitation,
directors' and officers' insurance coverage provided by the Company for which
Director may qualify. Vested benefits or other amounts which Director is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company, at or subsequent to the date of termination of Director's service
shall be payable in accordance with such plan, policy, practice, or program
except as expressly modified by this Agreement.
4. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Director,
Director's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
5. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U.S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Director, at 7202 Champions
Lane, West Chester, Ohio 45069, or such other address as either party may
specify in a written notice to the other party.
6. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky.
7. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
8. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
Remainder of this page intentionally left blank. Signature page follows.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESSES: COMAIR HOLDINGS, INC.
BY: /s/ David R. Mueller
- -------------------------------- ---------------------------------
Its: CEO
--------------------------------
/s/ John A. Haas
- -------------------------------- ------------------------------------
JOHN A. HAAS
<PAGE> 1
EXHIBIT (c)(10)
NON-EMPLOYEE DIRECTOR AGREEMENT
OF GERALD L. WOLKEN
<PAGE> 2
EXHIBIT (c)(10)
AGREEMENT
THIS AGREEMENT ("Agreement") is dated as of August 10, 1999, by and
between COMAIR HOLDINGS, INC., a Kentucky corporation ("Company"), and GERALD L.
WOLKEN ("Director").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the Commonwealth of
Kentucky and engaged in the airline business; and Director has been an active
and loyal director of the Company for a period of years which has contributed to
its success; and
WHEREAS, Company desires to provide for the additional service and
added responsibilities which may be involved in future service involving a
change in control (as hereinafter defined ) and encourage the continuation of
the service of the Director for and on behalf of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Director. The Director shall serve as a director of the
Company for the remainder of his current term of office, and each additional
term for which such Director is nominated by the Board of Directors and elected
to serve by the shareholders of the Company.
2. Change in Control.
(a) In the event of a "change in control" of the Company
(as hereinafter defined) during Director's service as a director of the
Company, the Director shall be entitled to receive from the Company the
following payments and benefits:
(i) The Company shall pay Director a lump sum in
cash, equal to Director's earned but unpaid director's fees
for the period through and including the date of the Change in
Control.
(ii) The Company shall pay Director an amount
equal to five (5) times the annual director's fees, including
fees for meetings and as chairman of any committees, in effect
as of the date of the Change in Control.
(iii) Director and Director's spouse, for the
remainder of their respective lives, and Director's dependent
children, for so long as they are under age 18 (or
<PAGE> 3
- 2 -
under age 23 if a full-time student) shall be entitled to free
system-wide flight privileges on Company flights to any
location which the Company serves. Such privileges shall
entitle Director, Director's spouse and Director's dependent
children to unlimited positive space (or space available, at
Director's option) tickets; provided, further, that all of
such flight privileges shall otherwise be subject to the same
conditions and restrictions as pertain from time to time to
the flight privileges generally provided by the Company to its
executive employees. Nothing herein shall be deemed as a
limitation upon any flight privileges for which Director may
otherwise qualify.
(b) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Company or a
subsidiary, or any Company or subsidiary's employee benefit
plan (including any trustee of such plan acting as trustee)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the
Company or Comair, Inc., ("Comair") representing fifty percent
(50%) or more of the combined voting power of the Company's or
Comair's then outstanding securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not the Company or subsidiary is then subject to such
reporting requirement;
(iii) When, during any period of two (2)
consecutive years during the term of this Agreement, the
individuals who, at the beginning of such period, constitute
the Board of the Company, cease for any reason other than
death to constitute at least a two-thirds (2/3) majority
thereof; provided, however, that a director who was not a
director at the beginning of such period shall be deemed to
have satisfied the two-year requirement if such director was
elected by, or on the recommendation of, at least two-thirds
(2/3) of the directors who were directors at the beginning of
such period (either actually or by prior operation of this
Subsection 2.(b)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company or
Comair by an entity other than any subsidiary through purchase
of assets, by merger, or otherwise.
<PAGE> 4
- 3 -
3. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Director's rights as a director of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices including, without limitation,
directors' and officers' insurance coverage provided by the Company for which
Director may qualify. Vested benefits or other amounts which Director is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company, at or subsequent to the date of termination of Director's service
shall be payable in accordance with such plan, policy, practice, or program
except as expressly modified by this Agreement.
4. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Director,
Director's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
5. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U.S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Director, at 15550
Kilbirnie Drive, S.E., Ft. Myers, Florida 33912, or such other address as either
party may specify in a written notice to the other party.
6. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky.
7. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
8. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
Remainder of this page intentionally left blank. Signature page follows.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESSES: COMAIR HOLDINGS, INC.
BY: /s/ David R. Mueller
- -------------------------------- ---------------------------------
Its: CEO
--------------------------------
/s/ Gerald L. Wolken
- -------------------------------- ------------------------------------
GERALD L. WOLKEN
<PAGE> 1
EXHIBIT (c)(11)
NON-EMPLOYER DIRECTOR AGREEMENT
OF ROBERT H. CASTELLINI
<PAGE> 2
EXHIBIT (c)(11)
AGREEMENT
THIS AGREEMENT ("Agreement") is dated as of August 10, 1999, by and
between COMAIR HOLDINGS, INC., a Kentucky corporation ("Company"), and ROBERT H.
CASTELLINI ("Director").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the Commonwealth of
Kentucky and engaged in the airline business; and Director has been an active
and loyal director of the Company for a period of years which has contributed to
its success; and
WHEREAS, Company desires to provide for the additional service and
added responsibilities which may be involved in future service involving a
change in control (as hereinafter defined ) and encourage the continuation of
the service of the Director for and on behalf of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Director. The Director shall serve as a director of the
Company for the remainder of his current term of office, and each additional
term for which such Director is nominated by the Board of Directors and elected
to serve by the shareholders of the Company.
2. Change in Control.
(a) In the event of a "change in control" of the Company
(as hereinafter defined) during Director's service as a director of the
Company, the Director shall be entitled to receive from the Company the
following payments and benefits:
(i) The Company shall pay Director a lump sum in
cash, equal to Director's earned but unpaid director's fees
for the period through and including the date of the Change in
Control.
(ii) The Company shall pay Director an amount
equal to five (5) times the annual director's fees, including
fees for meetings and as chairman of any committees, in effect
as of the date of the Change in Control.
(iii) Director and Director's spouse, for the
remainder of their respective lives, and Director's dependent
children, for so long as they are under age 18 (or
<PAGE> 3
- 2 -
under age 23 if a full-time student) shall be entitled to free
system-wide flight privileges on Company flights to any
location which the Company serves. Such privileges shall
entitle Director, Director's spouse and Director's dependent
children to unlimited positive space (or space available, at
Director's option) tickets; provided, further, that all of
such flight privileges shall otherwise be subject to the same
conditions and restrictions as pertain from time to time to
the flight privileges generally provided by the Company to its
executive employees. Nothing herein shall be deemed as a
limitation upon any flight privileges for which Director may
otherwise qualify.
(b) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Company or a
subsidiary, or any Company or subsidiary's employee benefit
plan (including any trustee of such plan acting as trustee)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the
Company or Comair, Inc., ("Comair") representing fifty percent
(50%) or more of the combined voting power of the Company's or
Comair's then outstanding securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not the Company or subsidiary is then subject to such
reporting requirement;
(iii) When, during any period of two (2)
consecutive years during the term of this Agreement, the
individuals who, at the beginning of such period, constitute
the Board of the Company, cease for any reason other than
death to constitute at least a two-thirds (2/3) majority
thereof; provided, however, that a director who was not a
director at the beginning of such period shall be deemed to
have satisfied the two-year requirement if such director was
elected by, or on the recommendation of, at least two-thirds
(2/3) of the directors who were directors at the beginning of
such period (either actually or by prior operation of this
Subsection 2.(b)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company or
Comair by an entity other than any subsidiary through purchase
of assets, by merger, or otherwise.
<PAGE> 4
- 3 -
3. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Director's rights as a director of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices including, without limitation,
directors' and officers' insurance coverage provided by the Company for which
Director may qualify. Vested benefits or other amounts which Director is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company, at or subsequent to the date of termination of Director's service
shall be payable in accordance with such plan, policy, practice, or program
except as expressly modified by this Agreement.
4. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Director,
Director's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
5. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U.S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Director, at 2180 Grandin
Road, Cincinnati, Ohio 45208, or such other address as either party may specify
in a written notice to the other party.
6. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky.
7. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
8. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
Remainder of this page intentionally left blank. Signature page follows.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESSES: COMAIR HOLDINGS, INC.
BY: /s/ David R. Mueller
- -------------------------------- ---------------------------------
Its: CEO
--------------------------------
/s/ Robert H. Castellini
- -------------------------------- ------------------------------------
ROBERT H. CASTELLINI
<PAGE> 1
EXHIBIT (c)(12)
NON-EMPLOYEE DIRECTOR AGREEMENT
OF CHRISTOPHER J. MURPHY, III
<PAGE> 2
EXHIBIT (c)(12)
AGREEMENT
THIS AGREEMENT ("Agreement") is dated as of August 10, 1999, by and
between COMAIR HOLDINGS, INC., a Kentucky corporation ("Company"), and
CHRISTOPHER J. MURPHY III ("Director").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the Commonwealth of
Kentucky and engaged in the airline business; and Director has been an active
and loyal director of the Company for a period of years which has contributed to
its success; and
WHEREAS, Company desires to provide for the additional service and
added responsibilities which may be involved in future service involving a
change in control (as hereinafter defined ) and encourage the continuation of
the service of the Director for and on behalf of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Director. The Director shall serve as a director of the Company for
the remainder of his current term of office, and each additional term for which
such Director is nominated by the Board of Directors and elected to serve by the
shareholders of the Company.
2. Change in Control.
(a) In the event of a "change in control" of the
Company (as hereinafter defined) during Director's service as a
director of the Company, the Director shall be entitled to receive from
the Company the following payments and benefits:
(i) The Company shall pay Director a lump sum
in cash, equal to Director's earned but unpaid director's fees
for the period through and including the date of the Change in
Control.
(ii) The Company shall pay Director an amount
equal to five (5) times the annual director's fees, including
fees for meetings and as chairman of any committees, in effect
as of the date of the Change in Control.
(iii) Director and Director's spouse, for the
remainder of their respective lives, and Director's dependent
children, for so long as they are under age 18 (or
<PAGE> 3
- 2 -
under age 23 if a full-time student) shall be entitled to free
system-wide flight privileges on Company flights to any
location which the Company serves. Such privileges shall
entitle Director, Director's spouse and Director's dependent
children to unlimited positive space (or space available, at
Director's option) tickets; provided, further, that all of
such flight privileges shall otherwise be subject to the same
conditions and restrictions as pertain from time to time to
the flight privileges generally provided by the Company to its
executive employees. Nothing herein shall be deemed as a
limitation upon any flight privileges for which Director may
otherwise qualify.
(b) A "Change in Control" means the occurrence of any of the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Company or a
subsidiary, or any Company or subsidiary's employee benefit
plan (including any trustee of such plan acting as trustee)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the
Company or Comair, Inc., ("Comair") representing fifty percent
(50%) or more of the combined voting power of the Company's or
Comair's then outstanding securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not the Company or subsidiary is then subject to such
reporting requirement;
(iii) When, during any period of two (2)
consecutive years during the term of this Agreement, the
individuals who, at the beginning of such period, constitute
the Board of the Company, cease for any reason other than
death to constitute at least a two-thirds (2/3) majority
thereof; provided, however, that a director who was not a
director at the beginning of such period shall be deemed to
have satisfied the two-year requirement if such director was
elected by, or on the recommendation of, at least two-thirds
(2/3) of the directors who were directors at the beginning of
such period (either actually or by prior operation of this
Subsection 2.(b)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company or
Comair by an entity other than any subsidiary through purchase
of assets, by merger, or otherwise.
<PAGE> 4
- 3 -
3. Non-Exclusivity of Benefits. Unless specifically provided herein,
neither the provisions of this Agreement nor the benefits provided hereunder
shall reduce any amounts otherwise payable, or in any way diminish Director's
rights as a director of the Company, whether existing now or hereafter, under
any compensation and/or benefit plans (qualified or nonqualified), programs,
policies, or practices including, without limitation, directors' and officers'
insurance coverage provided by the Company for which Director may qualify.
Vested benefits or other amounts which Director is otherwise entitled to receive
under any plan, policy, practice, or program of the Company, at or subsequent to
the date of termination of Director's service shall be payable in accordance
with such plan, policy, practice, or program except as expressly modified by
this Agreement.
4. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Director,
Director's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
5. Notice. Any notice required or permitted hereunder shall be given in
writing and delivered to the other party by U.S. registered or certified mail;
if to Company, at Post Office Box 75021, Greater Cincinnati International
Airport, Cincinnati, Ohio 45275; if to Director, at 1237 E. Jefferson Boulevard,
South Bend, Indiana 46617, or such other address as either party may specify in
a written notice to the other party.
6. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky.
7. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
8. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
Remainder of this page intentionally left blank. Signature page follows.
<PAGE> 5
- 4 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESSES: COMAIR HOLDINGS, INC.
- -------------------------------------- By: /s/ David R. Mueller
------------------------------
Its: CEO
- -------------------------------------- /s/ Christopher J. Murphy, III
----------------------------------
CHRISTOPHER J. MURPHY III
<PAGE> 1
EXHIBIT (c)(13)
NON-EMPLOYEE DIRECTOR AGREEMENT
OF RAYMOND A. MUELLER
<PAGE> 2
EXHIBIT (c)(13)
AGREEMENT
THIS AGREEMENT ("Agreement") is dated as of August 10, 1999, by and
between COMAIR HOLDINGS, INC., a Kentucky corporation ("Company"), and RAYMOND
A. MUELLER ("Director").
W I T N E S S E T H:
WHEREAS, the Company is organized under the laws of the Commonwealth of
Kentucky and engaged in the airline business; and Director has been an active
and loyal director of the Company for a period of years which has contributed to
its success; and
WHEREAS, Company desires to provide for the additional service and
added responsibilities which may be involved in future service involving a
change in control (as hereinafter defined ) and encourage the continuation of
the service of the Director for and on behalf of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Director. The Director shall serve as a director of the
Company for the remainder of his current term of office, and each additional
term for which such Director is nominated by the Board of Directors and elected
to serve by the shareholders of the Company.
2. Change in Control.
(a) In the event of a "change in control" of the Company
(as hereinafter defined) during Director's service as a director of the
Company, the Director shall be entitled to receive from the Company the
following payments and benefits:
(i) The Company shall pay Director a lump sum in
cash, equal to Director's earned but unpaid director's fees
for the period through and including the date of the Change in
Control.
(ii) The Company shall pay Director an amount
equal to five (5) times the annual director's fees, including
fees for meetings and as chairman of any committees, in effect
as of the date of the Change in Control.
(iii) Director and Director's spouse, for the
remainder of their respective lives, and Director's dependent
children, for so long as they are under age 18 (or
<PAGE> 3
- 2 -
under age 23 if a full-time student) shall be entitled to free
system-wide flight privileges on Company flights to any
location which the Company serves. Such privileges shall
entitle Director, Director's spouse and Director's dependent
children to unlimited positive space (or space available, at
Director's option) tickets; provided, further, that all of
such flight privileges shall otherwise be subject to the same
conditions and restrictions as pertain from time to time to
the flight privileges generally provided by the Company to its
executive employees. Nothing herein shall be deemed as a
limitation upon any flight privileges for which Director may
otherwise qualify.
(b) A "Change in Control" means the occurrence of any of
the following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Company or a
subsidiary, or any Company or subsidiary's employee benefit
plan (including any trustee of such plan acting as trustee)
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the
Company or Comair, Inc., ("Comair") representing fifty percent
(50%) or more of the combined voting power of the Company's or
Comair's then outstanding securities;
(ii) Any transaction or event relating to the
Company or any subsidiary required to be described pursuant to
the requirements of Item 6(e) of Schedule 14A of the
Securities and Exchange Commission under the Exchange Act (as
in effect on the effective date of this Agreement), whether or
not the Company or subsidiary is then subject to such
reporting requirement;
(iii) When, during any period of two (2)
consecutive years during the term of this Agreement, the
individuals who, at the beginning of such period, constitute
the Board of the Company, cease for any reason other than
death to constitute at least a two-thirds (2/3) majority
thereof; provided, however, that a director who was not a
director at the beginning of such period shall be deemed to
have satisfied the two-year requirement if such director was
elected by, or on the recommendation of, at least two-thirds
(2/3) of the directors who were directors at the beginning of
such period (either actually or by prior operation of this
Subsection 2.(b)(iii)); or
(iv) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company or
Comair by an entity other than any subsidiary through purchase
of assets, by merger, or otherwise.
<PAGE> 4
- 3 -
3. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Director's rights as a director of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices including, without limitation,
directors' and officers' insurance coverage provided by the Company for which
Director may qualify. Vested benefits or other amounts which Director is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company, at or subsequent to the date of termination of Director's service
shall be payable in accordance with such plan, policy, practice, or program
except as expressly modified by this Agreement.
4. Assignment and Successors in Interest. To the extent that the
obligations provided for herein require the personal performance of Director,
Director's rights, interests and obligations as provided herein may not be
assigned. Except as otherwise provided in the immediately preceding section of
this sentence, all rights, privileges and obligations of the parties hereto
shall inure to the benefit of and be binding upon their respective successors,
assigns, heirs, executors, administrators and estates. The Company will require
any successor (whether by reason of a Change in Control, direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
5. Notice. Any notice required or permitted hereunder shall be
given in writing and delivered to the other party by U.S. registered or
certified mail; if to Company, at Post Office Box 75021, Greater Cincinnati
International Airport, Cincinnati, Ohio 45275; if to Director, at 4601 Gulf
Shore Boulevard, #4, Naples, Florida 34103, or such other address as either
party may specify in a written notice to the other party.
6. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky.
7. Severability. If any portion of this Agreement shall be held
unenforceable for any reason, the same shall not affect the validity or
enforceability of the remaining provisions contained herein.
8. Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
Remainder of this page intentionally left blank. Signature page follows.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
WITNESSES: COMAIR HOLDINGS, INC.
BY: /s/ David R. Mueller
- -------------------------------- ---------------------------------
Its: CEO
--------------------------------
/s/ Raymond A. Mueller
- -------------------------------- ------------------------------------
RAYMOND A. MUELLER
<PAGE> 1
EXHIBIT (c)(15)
1990 EMPLOYEE STOCK OPTION PLAN
<PAGE> 2
EXHIBIT (c)(15)
Comair Holding, Inc.
1990
Stock Option Plan
ARTICLE 1.
OBJECTIVES
1.1 Comair Holdings, Inc. ("Comair") has established this Stock
Option Plan effective June 5, 1990 as an incentive to the attraction and
retention of dedicated and loyal employees and directors of outstanding ability,
to stimulate the efforts of such persons in meeting Comair's objectives and to
encourage ownership of Comair's Common Stock by employees and directors.
ARTICLE 2.
DEFINITIONS
2.1 For purposes of the Plan the following terms shall have the
definition which is attributed to them, unless another definition is clearly
indicated by a particular usage and context.
A. "Affiliate" means a person who directly or indirectly,
through one (1) or more intermediaries, controls, or is controlled by, or is
under common control with, a specified person.
B. "Associate" means any corporation or organization
(other than the Company) of which any person is an officer, director or partner
or is, directly or indirectly, the Beneficial Owner of Ten Percent (10%) or more
of any class of equity securities.
C. "Beneficial Owner" means a person:
(i) who, individually or with any Affiliates or Associates,
beneficially owns Comair Common Stock, directly or indirectly; or
(ii) who, individually or with Affiliates or Associates has:
(1) the right to acquire Comair Common Stock,
whether such right is exercisable immediately or only after
the passage of time ans whether or not such right is
exercisable only after specified conditions are met, pursuant
to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or
options or otherwise;
<PAGE> 3
(2) the right to vote Comair Common Stock
pursuant to any agreement, arrangement or understanding; or
(3) any agreement, arrangement or
understanding for the purposes of acquiring, holding, voting
or disposing of Comair Common stock with any other person who
beneficially owns, or whose Affiliates or associates
beneficially own, directly or indirectly, such shares of
Comair Common Stock.
D. "Code" means the Internal Revenue Code of 1986.
E. The "Company" means Comair Holdings, Inc. and any
subsidiary of Comair Holdings, Inc. as the term "subsidiary" is defined for
purposes of Section 422A of the Code.
F. "Effective Date of Exercise" means the date on which the
Company has received a written notice of exercise of an Option, in such form as
is acceptable to the Committee, and full payment of the purchase price.
G. "Effective Date of Grant" means the date on which the
Committee makes an award of an Option.
H. "Eligible Employee" means any individual who performs
services for the Company and is included on the regular payroll of the Company.
A director of the Company who is not an Eligible Employee described in the
previous sentence is an Eligible Employee only with respect to the grant of a
Nonqualified Stock Option.
I. "Fair Market Value" means the last sale price reported on
any stock exchange or over-the-counter trading system on which Shares are
trading on a specified date or, it not so trading, the average of the closing
bid and asked prices for a Share on a specified date. If no sale has been made
on the specified date, then prices on the last preceding day on which any such
sale shall have been made shall be used in determining fair market value under
either method prescribed in the previous sentence.
J. "Incentive Stock Option" shall have the same meaning as
given to that term by Section 422A of the Code and any regulations or rulings
promulgated thereunder.
K. "Independent Member" means any director who is not
an officer or full-time employee of the Company or an Affiliate of a person who
proposes to acquire Beneficial Ownership of more than Twenty Percent (20%) of
the Comair Common Stock.
L. "Nonqualified Stock Option" means any Option granted under
the Plan which is not considered an Incentive Stock Option.
2
<PAGE> 4
M. "Option" means the right to purchase from Comair a stated
number of Shares at a specified price. The option may be granted to an Eligible
Employee subject to the terms of this Plan, and such other conditions and
restrictions as the Committee deems appropriate. Each Option shall be designated
by the Committee to be either an Incentive Stock Option or a Nonqualified Stock
Option.
N. "Option Price" means the purchase price per Share subject
to an Option and shall be fixed by the Committee, but shall not be less than
100% of the Fair Market Value of a Share on the Effective Date of Grant in the
case of an Incentive Stock Option, except as otherwise provided in Section 9.2.
O. "Permanent and Total Disability" shall mean any medically
determinable physical or mental impairment rendering an individual unable to
engage in any substantial gainful activity, which disability can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
P. "Share" means one share of the Common par value, of Comair.
ARTICLE 3.
ADMINISTRATION
3.1 The Plan shall be administered by a committee (the "Committee")
which shall be the Comair Compensation Committee, unless otherwise designated by
the Board of Directors of Comair. The Committee shall be comprised of at least
three directors each of whom shall be ineligible to receive options under the
Plan. All actions shall be taken by a majority of the committee.
3.2 Except as specifically limited by the provisions of the Plan, the
Committee in its discretion shall have the authority to:
A. Determine which Eligible Employees shall be granted
Options;
B. Determine the number of Shares which may be subject to each
Option;
C. Determine the term of each Option;
D. Determine whether each Option is an Incentive Stock Option
or Nonqualified Stock Option;
E. Interpret the provisions of the Plan and decide all
questions of fact arising in its application; and
3
<PAGE> 5
F. Prescribe such rules and procedures for Plan administration
as from time to time it may deem advisable.
3.3 Any action, decision, interpretation or determination by the
Committee with respect to the application or administration of this Plan shall
be final and binding upon all persons, and need not be uniform with respect to
its determination of recipients, amount, timing, form, terms or provisions of
Options.
3.4 No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan or any Option
granted hereunder, and to the extent permitted by law, all members shall be
indemnified by the company for any liability and expenses which may occur
through any claim or cause of action.
ARTICLE 4.
SHARES SUBJECT TO PLAN
4.1 The Shares that may be made subject to Options granted under the
Plan shall not exceed Five Hundred Thousand (500,000) Shares in the aggregate.
Upon lapse or termination of any Option for any reason without being completely
exercised, the Shares which were subject to such Option may again be subject to
other Options.
ARTICLE 5.
GRANTING OF OPTIONS
5.1 Subject to the terms and conditions of the Plan, the Committee may,
from time to time prior to May 31, 2000, grant Options to Eligible Employees on
such terms and conditions as the Committee may determine. More than one Option
may be granted to the same Eligible Employee.
ARTICLE 6.
TERMS OF OPTIONS
6.1 Subject to specific provisions relating to Incentive Stock Options
set forth in Article 9, each Option shall be for a term of from one to ten years
from the Effective Date of Grant and may not be exercised during the first
twelve months of the terms of said Option. Commencing on the first anniversary
of the Effective Date of Grant of an Option, the Option may be exercised for 25%
of the total Shares covered by the Option with an additional 25% of the
4
<PAGE> 6
total Shares covered by the Option becoming exercisable on each succeeding
anniversary until the Option is exercisable to its full extent; provided,
however, that the Committee may establish a different exercise schedule and
impose other conditions upon exercise for any particular Option or groups of
Options on the Effective Date of Grant. This right of exercise shall be
cumulative and shall be exercisable in whole or in part. The Committee in its
sole discretion may permit particular holders of Options to exercise an Option
to a greater extent than provided herein.
6.2 The holder of an Option must remain continuously in the service of
the Company as an employee or director for a period of at least twelve months
before such Option becomes exercisable to the extent provided in Section 6.1;
provided, however, that employment shall be at the pleasure of the Board of
Directors or officers of the Company at such compensation as the Company shall
determine and service as a director shall be at the pleasure of the
shareholders. Nothing contained in this Plan or in any option granted pursuant
to it shall confer upon any employee any right to continue in the employ of the
Company or to interfere in any way with the right of the Company to terminate
employment at any time. So long as a holder of an Option shall continue to be an
employee of the Company, the Option shall not be affected by any change of the
employee's duties or position.
ARTICLE 7.
EXERCISE OF OPTIONS
7.1 Any person entitled to exercise an Option in whole or in part may
do so by delivering to the Company, attention Corporate Secretary, at its
principal office a written notice of exercise. The written notice shall specify
the number of Shares for which an Option is being exercised and shall be
accompanied by full payment of the Option Price for the Shares being purchased.
ARTICLE 8.
PAYMENT OF OPTION PRICE
8.1 Payment of the Option Price may be made in cash, by the tender of
Shares, or both. The value of each Share tendered shall be deemed to be the Fair
Market Value for a Share on the day the Shares are tendered for payment.
8.2 Payment through tender of Shares nay be done by instruction from
the Optionee to the Company to withhold from the Shares issuable upon exercise
that number of Shares which have a Fair Market Value equal to the exercise price
for the Option or the portion thereof being exercised.
5
<PAGE> 7
ARTICLE 9.
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether an Option is
to be considered an Incentive Stock Option or a Nonqualified Stock Option. The
Committee may grant both an Incentive Stock Option and a Nonqualified Stock
Option to the same individual. However, where both an Incentive Stock Option and
a Nonqualified Stock Option are awarded at one time, such Options shall be
deemed to have been awarded in separate grants, shall be clearly identified, and
in no event will the exercise of one such Option affect the right to exercise
the other Option.
9.2 Any option designated by the Committee as an Incentive Stock Option
will be subject to the general provisions applicable to all Options granted
under the Plan. In addition, the Incentive Stock Option shall be subject to the
following specific provisions:
A. At the time the Incentive Stock Option in granted, if the
Eligible Employee owns, directly or indirectly, stock representing more
than 10% of the total combined voting power of all classes of stock of
the Company then:
(i) The Option Price must equal at least 110%
of the Fair Market Value on the Effective Date of Grant; and
(ii) The term of the Option shall not be
greater than five years from the Effective Date of Grant.
B. The aggregate Fair Market Value of Shares (determined at
the Effective Date of Grant) with respect to which Incentive Stock
Options are exercisable by an Eligible Employee for the first time
during any calendar year shall not exceed $100,000.
9.3 If any Option is not granted, exercised, or hold pursuant to
the provisions noted lately above, it will be considered to be a Nonqualified
Stock Option to the extent that any or all of the grant is in conflict with
these restrictions.
ARTICLE 10.
TRANSFERABILITY OF OPTION
10.1 During the lifetime of an Eligible Employee to whom an Option has
been granted, such Option is not transferable and may be exercised only by such
individual. Upon the death of an Eligible Employee to whom an Option has been
granted, the Option may be transferred to the
6
<PAGE> 8
beneficiaries or heirs of the holder of the Option by will or by the laws of
descent and distribution, and exercised only in accordance with Section 11.1
hereof.
ARTICLE 11.
TERMINATION OF OPTIONS
11.1 An Option may be terminated as follows:
A. During the period of continuous employment or service as a
director with the Company, an Option will be terminated only if it has
been fully exercised or it has expired by its terms.
B. Upon termination of employment or of service as a director
for any reason, the Option will terminate upon the earlier of the full
exercise of the Option, the expiration of the Option by its terms or
the end of the three month period following the date of termination.
For purposes of the Plan, a leave of absence approved by the Company
shall not be deemed to be termination of employment.
C. If an Eligible Employee to whom an Option was granted shall
die or becomes subject to a Permanent and Total Disability while
employed by the Company or while serving as a director of the Company,
or within three months of termination of employment or of service as a
director for any reason, such Option may be exercised to the extent
that the Eligible Employee shall have been entitled to exercise it at
the time of death, termination of employment or service as a director,
or disability, as the case may be, at any time within one year after
the date of such death or disability, by the person, the estate of the
employee or the person or persons to whom the Option may have been
transferred by will or by the laws of descent and distribution.
11.2 Except as provided in Article 12 hereof, in no event will
the continuation of the term of an Option beyond the date of termination of
employment or of service as a director allow the Eligible Employee, or his
beneficiaries or heirs, to accrue additional rights under the Plan, or to
purchase more Shares through the exercise of an Option than could have been
purchased on the day that employment or service as a director was terminated.
ARTICLE 12.
ADJUSTMENTS TO SHARES AND OPTION PRICE
12.1 In the event of changes in the outstanding of Common Stock
Comair as a result of stock dividends, splitups, recapitalizations, combinations
of Shares or exchanges of Shares, the
7
<PAGE> 9
number and class of Shares and price per share for each Option covered under the
Plan and each outstanding Option shall be correspondingly adjusted by the
Committee.
12.2 The Committee shall make appropriate adjustments in the Option
Price to reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
12.3 In the event of the dissolution or liquidation of Comair or any
merger, consolidation or combination in which Comair is not the surviving
corporation or in which the outstanding Shares of Comair are Converted into
cash, other securities or other property, each outstanding Option shall
terminate as of a date fixed by the Committee provided that not less than 20
days' written notice of the date of expiration shall be given to each holder of
an Option and each such holder shall have the right during such period following
notice to exercise the Option as to all or any part of the Shares for which it
is exercisable at the time of such notice.
12.4 If any person becomes the Beneficial Owner of more than Twenty
Percent (20%) of the outstanding Comair Common Stock, all outstanding Options
shall become immediately exercisable as to all Shares covered by such Options.
The provisions of this subsection shall not be applicable (i) to acquisitions of
securities by any person who on June 5, 1990 is the Beneficial Owner of more
than Twenty Percent (20%) of the Comair Common Stock, or (ii) if prior to the
time that a person becomes the Beneficial Owner of more than Twenty Percent
(20%) of the Comair Common Stock, a majority of the Independent Members of the
Board of Directors elect that the acceleration of vesting shall not occur.
ARTICLE 13.
OPTION AGREEMENTS
13.1 All Options granted under the Plan shall be evidenced by a written
agreement in such form or forms as the Committee in its sole discretion may
determine.
ARTICLE 14.
AMENDMENT OR DISCONTINUANCE OF PLAN
14.1 The Board of Directors of Comair may at any time amend, suspend,
or discontinue the Plan; provided, however, that no amendments by the Board of
Directors of Comair shall, without further approval of the shareholders of the
Company:
A. Change the class of Eligible Employees;
8
<PAGE> 10
B. Except as provided in Articles 4 and 12 hereof,
increase the number of Shares which may be subject to Options granted
under the Plan; or
14.2 No amendment to the Plan shall alter or impair any Option granted
under the Plan without the consent of the holders thereof.
ARTICLE 15.
EFFECTIVE DATE
15.1 The Plan shall become effective as of June 5, 1990 (the "Effective
Date"), having been adopted by the Board of Directors of Comair on such date
subject to approval by the affirmative vote of the holders of a majority of the
shares of Common Stock of Comair voting on the issue.
ARTICLE 16.
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken by the Board
of Directors or shareholders of Comair shall constitute the granting of an
Option. An Option shall be granted only at such time as a written Option
agreement shall have been executed and delivered to the respective employee and
the employee shall have executed an agreement respecting the Option in
Conformance with the provisions of this Plan.
16.2 Certificates for Shares purchased through exercise of Options will
be issued in regular course after exercise of the Option and payment therefor as
called for by the terms of the Option but in no event shall the Company be
obligated to issue certificates more often than once each quarter. No persons
holding an Option or entitled to exercise an Option granted under this Plan
shall have any rights or privileges of a shareholder of the Company with respect
to any Shares issuable upon exercise of such Option until certificates
representing such Shares shall have been issued and delivered. No Shares shall
be issued and delivered upon exercise of an Option unless and until the Company,
in the opinion of its counsel, has complied with all applicable registration
requirements of the Securities Act of 1933 and any applicable state securities
laws and with any applicable listing requirements of any national securities
exchange on which the Company's securities may then be listed as well as any
other requirements of law.
16.3 This Plan shall continue in effect until the expiration of all
Options granted under the Plan unless terminated earlier in accordance with
Article XI; provided, however, that it shall terminate ten years after the
Effective Date.
9
<PAGE> 11
INCENTIVE STOCK OPTION AGREEMENT
1. Comair Holdings, Inc., a Kentucky corporation ("Comair"), hereby
grants to the Optionee" named below an Incentive Stock Option in accordance with
and subject to the terms and restrictions of Comair Holdings, Inc.'s 1990 Stock
Option Plan ("Plan"), as amended, a copy of which is attached hereto and made a
part hereof, and of this Option Agreement, to purchase the number of shares of
Common Stock, no par value, of Comair at a price set forth herein as follows:
Optionee:_________________________________________________
No. of Shares Covered by Option:__________________________
Option Price Per Share:___________________________________
Date of Option:___________________________________________
Expiration Date:__________________________________________
2. Option granted under this Agreement shall not be exercisable prior
to the expiration of twelve (12) months from the Date of Option set forth above
("Exercise Date"). After the Exercise Date and until the Expiration Date set
forth above, the Option granted under this Agreement may be exercised at the
rate of up to 25% of the Shares covered by the Option granted under this
Agreement per year. To the extent that such 25% is not exercised in any given
year, the right to exercise shall accumulate and be exercisable, in whole or in
part, in any of the subsequent years of the term of the Option granted under
this Agreement, in addition to the 25% exercisable in such subsequent year. The
Option granted under this Agreement may not be exercised as to less than ten
(10) Shares at any time (or the remaining Shares then purchasable under the
Option if less than ten (10) Shares) .
3. This Option may be exercised for the number of shares specified by
written notice delivered to Comair at least ten (10) days prior to the date on
which purchase is requested, accompanied by full payment in the manner and
subject to the conditions set forth pursuant to the terms of Article 8 of the
Plan for the number of shares in respect of which it is exercised. If any
applicable law or regulation requires Comair to take any action with respect to
the shares specified in such notice, or if any action remains to be taken under
the Articles of Incorporation or By-Laws of Comair to effect due issuance of the
shares, then Comair shall take such action and the day for delivery of such
stock shall be extended for the period necessary to take such action.
4. As a condition of Comair's obligation to issue shares upon exercise
of this Option, the Optionee or other person to whom the shares are to be issued
shall, concurrently with the delivery of the stock certificates representing the
shares so purchased, give such written
<PAGE> 12
assurances to Comair as its counsel shall require, to the effect that the
purchaser is acquiring the shares for investment and without any present
intention of reselling or redistributing the same in violation of any applicable
State or Federal Law. In the event that Comair elects to register the stock
which is the subject to this Option under the Securities Act of 1933, the
issuance of such stock shall not be subject to the restrictions contained in
this Paragraph (4).
5. Options granted to an Optionee hereby shall not be exercisable while
there is outstanding any other Incentive Stock Option previously granted to such
Optionee and, during the lifetime of the Optionee, is exercisable only by the
Optionee.
6. This Option is not transferable other than by will or by operation
of the laws of descent and distribution.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
COMAIR HOLDINGS, INC.
BY: ___________________________
I hereby accept the Incentive Stock Option to purchase shares of Common
Stock of Comair Holdings, Inc. granted above in accordance with and subject to
the terms and conditions of this Agreement and of Comair Holdings, Inc.'s is
1990 Stock Option Plan, and agree to be bound thereby.
Date Accepted:
____________________________________ _____________________________________
, Optionee
2
<PAGE> 13
NONQUALIFIED STOCK OPTION AGREEMENT
1. Comair Holdings, Inc., a Kentucky corporation ("Comair"),
hereby grants to the Optionee named below a Nonqualified Stock Option in
accordance with and subject to the terms and restrictions of Comair Holdings,
Inc.'s 1990 Stock Option Plan ("Plan"), as amended, a copy of which is attached
hereto and made a part hereof, and of this Option Agreement, to purchase the
number of shares of Common Stock, no par value, of Comair at a price set forth
herein as follows:
Optionee:_________________________________________________
No. of Shares Covered by Option:__________________________
Option Price Per Share:___________________________________
Date of Option:___________________________________________
Expiration Date:__________________________________________
2. The Option granted under this Agreement shall not be exercisable
prior to the expiration of twelve (12) months from the Date of Option set forth
above ("Exercise Date"). After the Exercise Date and until the Expiration Date
set forth above, the Option granted under this Agreement may be exercised at the
rate of up to 25% of the Shares covered by the Option granted under this
Agreement per year. To the extent that such 25% is not exercised in any given
year, the right to exercise shall accumulate and be exercisable, in whole or in
part, in any of the subsequent years of the term of the Option granted under
this Agreement, in addition to the 25% exercisable in such subsequent year. The
Option granted under this Agreement may not be exercised as to less than ten
(10) Shares at any time (or the remaining Shares then purchasable under the
Option if less than ten (10) Shares).
3. This Option may be exercised for the number of shares specified by
written notice delivered to Comair at least ten (10) days prior to the date on
which purchase is requested, accompanied by full payment in the manner and
subject to the conditions set forth pursuant to the terms of Article 8 of the
Plan for the number of shares in respect of which it is exercised. If any
applicable law or regulation requires Comair to take any action with respect to
the shares specified in such notice, or if any action remains to be taken under
the Articles of Incorporation or By-Laws of Comair to effect due issuance of the
shares, then Comair shall take such action and the day for delivery of such
stock shall be extended for the period necessary to take such action.
4. As a condition of Comair's obligation to issue shares upon exercise
of this Option, the Optionee or other person to whom the shares are to be issued
shall, concurrently with the delivery of the stock certificates representing the
shares so purchased, give such written
<PAGE> 14
assurances to Comair as its counsel shall require, to the effect that the
purchaser is acquiring the shares for investment and without any present
intention of reselling or redistributing the same in violation of any applicable
State or Federal Law. In the event that Comair elects to register the stock
which is the subject to this Option under the Securities Act of 1933, the
issuance of such stock shall not be subject to the restrictions contained in
this Paragraph (4).
5. This Option is not transferrable other than by will or by operation
of the laws of descent and distributions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
COMAIR HOLDINGS, INC.
By: __________________________
I hereby accept the Nonqualified Stock Option to purchase shares of
Common Stock of Comair Holdings, Inc. granted above in accordance with and
subject to the terms and conditions of this Agreement and of Comair Holdings,
Inc.'s 1990 Stock Option Plan, and agree to be bound thereby.
Date Accepted:
____________________________________ _____________________________________
, Optionee
2
<PAGE> 1
EXHIBIT (c)(16)
1992 DIRECTOR'S STOCK OPTION PLAN
<PAGE> 2
EXHIBIT (c)(16)
COMAIR HOLDINGS, INC.
1992 DIRECTORS' STOCK OPTION PLAN
The purpose of the 1992 Directors' Stock Option Plan (the "Plan") is to
advance the interests of Comair Holdings, Inc. (the "Company") and its
shareholders by affording non-employee members of the Company's Board of
Directors an opportunity to increase their proprietary interest in the Company
by the grant of options to them under the terms set forth herein. The Company
believes that this Plan will give an incentive to these persons to increase
revenues and profits of the Company.
1. Effective Date of the Plan. This Plan will be effective upon
approval of the Plan by the Shareholders at the 1992 regular Meeting of
Shareholders of the Company. If the Plan is not approved at such Meeting, the
Plan shall be null and void.
2. Shares Subject to the Plan. The shares to be issued upon the
exercise of the options granted under the Plan shall be shares of Common Stock,
no par value, of the Company. Either treasury or authorized and unissued shares
of Common Stock, or both, as the Board of Directors shall from time to time
determine, may be so issued. Shares of Common Stock which are the subject of any
lapsed, expired or terminated options may be made available for re-offering
under the Plan.
Subject to the provisions of Section 4 hereof, the aggregate number of
shares of Common Stock for which options may be granted under the Plan shall be
105,000 shares.
3. Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors, or such other committee appointed by the
Board of Directors (the "Committee"). Each will consist of three or more
directors who may also be eligible to participate in the plan.
All options granted under the Plan shall be evidenced by a written
agreement. Subject to the express provisions of the Plan, the Committee shall
have the authority to establish the terms and conditions of such option
agreement, consistent with this Plan, which agreements need not be uniform.
4. Adjustment to Common Stock and Option Price.
4.1 In the event of changes in the outstanding Common Stock of
the Company as a result of stock dividends, split-ups, recapitalizations,
combinations or exchanges, the number and class of shares of Common Stock and
the Option Price for each outstanding option under the Plan shall be
correspondingly adjusted by the Committee.
4.2 The Committee shall make appropriate adjustments in the
Option Price to reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
<PAGE> 3
2
4.3 In the event of the dissolution or liquidation of the
Company or any merger, consolidation or combination in which the Company is not
the surviving corporation or in which the outstanding shares of Common Stock of
the Company are converted into cash, other securities or other property, each
outstanding option issued hereunder shall terminates as of a date fixed by the
Committee. Not less than 20 days' written notice of the date of expiration shall
be given to each holder of an option and each such holder shall have the right
during such period following notice to exercise the option as to all or any part
of the option for which it is exercisable at the time of such notice.
5. Eligible Directors; Grant of Options. For purposes of this Plan, any
Director of the Company who is not an employee of the Company or any of its
subsidiaries is considered an "Eligible Director". On the date of the approval
of the Plan by the Shareholders, each person then serving as an Eligible
Director shall be granted an option to purchase 1,500 shares of Common Stock of
the Company.
Each Eligible Director shall be granted an option to purchase 1,500
shares of Common Stock immediately following each subsequent Annual Meeting of
the Shareholders of the Company. If the Board of Directors elects to fill a
vacancy on the Board with a person who qualifies as an Eligible Director, then
the new director will begin receiving stock options immediately after the first
Annual Meeting of Shareholders following such election.
6. Price. The purchase price of the shares of Common Stock which may be
acquired pursuant to the exercise of any option granted pursuant to the Plan
shall be the last sale price reported immediately prior to the date of grant
("Option Price").
7. Period of Option. The term of each option shall be ten years from
the date of grant, unless terminated earlier pursuant to the provisions hereof.
8. Vesting and Exercise of Options. The right to exercise options will
vest six months from the date of the granting thereof. An option may be
exercised by an Eligible Director as to all or part of the shares covered
thereby by giving written notice to the Company at its principal office,
directed to the attention of its Secretary, accompanied by payment of the Option
Price in full for shares being purchased. The payment of the Option Price shall
be either in cash or, subject to any conditions set forth in the option
agreement, by delivery of shares of Common Stock of the Company having a fair
market value equal to the Option Price for the Options being exercised. The fair
market value of shares of Common Stock of the Company shall be equal to the last
sale price reported on any stock exchange or over-the-counter trading system on
which shares are trading on the date of exercise. If no sale has been made on
the exercise date, then the last sale price on the last preceding day on which
any such sale shall have been made shall be used in determining such fair market
value. If the Common Stock is not trading in a market reporting last sale
prices, the average of closing bid and ask prices shall be used in lieu of last
sale prices.
<PAGE> 4
3
Unless there is in effect at the time of exercise a registration
statement under the Securities Act of 1933 permitting the resale to the public
of shares acquired under the Plan, the holder of the option shall, except to the
extent determined by the Committee that such is not required, (i) represent and
warrant in writing to the Company that the shares acquired are being acquired
for investment and not with a view to the distribution thereof, (ii) acknowledge
that the shares acquired may not be sold unless registered for sale under said
Act or pursuant to an exemption from such registration, and (iii) agree that the
certificates evidencing such shares shall bear a legend to the effect of clauses
(i) and (ii).
9. Nontransferability of Options. No option granted under the Plan
shall be transferable otherwise than by will or by the laws of descent and
distribution, and an option may be exercised only by an Optionee during his or
her lifetime.
10. Termination of Option. Any option granted pursuant to this Plan
will terminate upon the earliest of the full exercise thereof, the expiration of
the option by its terms or the end of the three month period following the date
the grantee ceases to qualify as an Eligible Director.
11. Death or Disability of an Optionee. If an optionee shall cease to
be an Eligible Director on account of disability or death, or an optionee dies
or is disabled during the three month period following the date such person
ceases to be an Eligible Director, an option theretofore granted to such
Eligible Director may be exercised by the optionee or, in the case of death, by
the legal representative of the estate of the deceased option holder or by the
person or persons to whom such Eligible Director's rights under the option shall
pass by will or the laws of descent and distribution, at any time within one
year from the date the optionee ceased to be an Eligible Director, but only to
the extent the option holder was entitled to exercise the option at the date of
such cessation and only during the option period. "Disability" shall have the
meaning ascribed to it in Section 105(d)(4) of the Internal Revenue Code of
1986, as amended.
12. No Further Vesting. Except as provided in Article 4 hereof, in no
event will the continuation of an Option beyond the date an optionee ceases to
serve as an Eligible Director allow an optionee, or his beneficiaries or heirs,
to accrue additional rights under the Plan, or to purchase more shares of Common
Stock through the exercise of an Option than could have been purchased on the
date the optionee ceases to serve as an Eligible Director.
13. Rights as a Stockholder. The holder of an option shall not have any
of the rights of a stockholder of the Company with respect to the shares subject
to an option until a certificate or certificates for such shares shall have been
issued upon the exercise of the option.
14. Amendment and Termination. The Plan shall terminate ten years after
its adoption by the Board of Directors and thereafter no options shall be
granted thereunder. All options outstanding at the time of termination of the
Plan shall continue in full force and effect in accordance with and subject to
the terms and conditions of the Plan. The Board of Directors of the Company
<PAGE> 5
4
at any time prior to that date may terminate the Plan or make such amendments to
it as the Board of Directors shall deem advisable; provided, however, that
except as provided in Section 4 hereof, the Board of Directors may not, without
shareholder approval increase the maximum number of shares as to which options
may be granted under the Plan, change the class of persons eligible to receive
options under the Plan or change the number of options to be granted to each
eligible person under the Plan. No termination or amendment of the Plan may,
without the consent of the holder of an option then existing, terminate such
option or materially and adversely affect any rights under any outstanding
option. The Plan may not be amended more than once every six months other than
to conform with changes in the Internal Revenue Code, the Employee Retirement
Income Security Act or the rules thereunder.
<PAGE> 1
EXHIBIT (c)(19)
DELTA CONNECTION AGREEMENT
<PAGE> 2
EXHIBIT (c)(19)
DELTA CONNECTION
AGREEMENT
This Agreement (this "Agreement"), dated and effective as of
the first day of October, 1989, is between Delta Air Lines, Inc., Hartsfield
Atlanta International Airport, Atlanta, Georgia 30320 ("Delta"), and Comair,
Inc., Box 75021, Airport Branch, Greater Cincinnati Airport, Cincinnati, Ohio
45275 ("Comair").
WHEREAS, Delta operates the Delta Connection program; and
WHEREAS, Comair desires for Delta to perform and provide
various marketing, schedule and fare related, and other services for Comair in
connection with the Delta Connection program; and
WHEREAS, Delta is willing to perform and provide various
marketing, scheduling and fare related, and other services for Comair in
connection with the Delta Connection program; and
WHEREAS, this Agreement will enhance the ability of Comair and
Delta to serve the public and the communities that they serve or may choose to
serve; and
WHEREAS, Delta and Comair currently are parties to a certain
Delta Connection Agreement dated May 30, 1986, as amended from time to time (the
"1986 Agreement") and now wish to terminate the 1986 Agreement and substitute
this Agreement in lieu thereof;
NOW, THEREFORE, for and in consideration of the mutual
undertakings set for herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Delta and Comair,
intending to be legally bound, hereby agree as follows:
<PAGE> 3
ARTICLE 1. FARES AND RULES PUBLICATION.
A. Comair hereby appoints Delta as its agent to instruct appropriate
publishers to publish Comair's fares, rules and related information, and Delta
hereby accepts such appointment. Delta will use its best efforts to instruct
such publishers of such information within one (1) business day of receipt of
written or telex notification of the fares, rules or other information that
Comair desires to publish. Delta will advise Comair from time to time of the
format in which fare, rule and other information must be submitted to Delta.
B. Delta is not responsible for determining or reviewing the accuracy of
any information provided to Delta by Comair pursuant to this Article I, and
Comair is solely responsible for the accuracy of such information.
C. The selection of publishers for Comair's fare, rule and related
information will be in Delta's sole discretion; provided, however, that Delta
will apply criteria for the selection of Comair's publishers similar to the
criteria that Delta applies to the selection of its own publishers.
D. Delta will pay all routine expenses associated with publication of
Comair's fares, rules and related information as set forth herein.
ARTICLE 2. SCHEDULES PUBLICATION.
A. Comair hereby appoints Delta as its agent to furnish Comair's
schedules and related information to appropriate publishers, and Delta hereby
accepts such appointment. Delta will notify Comair when any schedules and
related information must be submitted to Delta and of the formats in which the
schedules and related information must be submitted. Comair understands that
each such notice will require it to submit such information to Delta in writing
approximately six (6) weeks in advance of the scheduled publication date to
which such notice relates so that the information can be properly disseminated
to marketers of air transportation and to the public. Delta will furnish to
publishers all such information that it receives from Comair in a timely manner.
B. Delta will pay all routine expenses associated with publishing
Comair's schedules and related information as set forth herein.
-2-
<PAGE> 4
C. To avoid confusing or misleading the public and marketers of air
transportation, Comair agrees to use only the flight numbers assigned by Delta
to Comair flights and agrees not to list such flights under other flight numbers
unless otherwise agreed to by Delta; provided, however, Comair may list a
"dummy" flight if necessary to enable it to retain its existing two letter
carrier code or for other similar purposes.
D. The selection of publishers for Comair's schedules and related
information will be in Delta's sole discretion; provided, however, that Delta
will apply criteria for the selection of Comair's publishers similar to the
criteria that Delta applies to the selection of its own publishers. Nothing in
this Article 1 or this Agreement shall prevent Comair from publishing its
schedules and related information at any time or in any way that Comair deems
desirable, so long as any such information is the same as or consistent with the
information that Comair provides to Delta.
E. If any publishers selected by Delta permit airlines to list
connecting services in addition to the connecting services ordinarily listed by
that publisher, Delta will request and pay for such additional listings if
Delta, in its sole discretion, determines that such additional listings would be
beneficial. In determining whether any such additional listings for Comair
should be published, Delta will use criteria similar to the criteria used by
Delta for listing Delta's paid connections.
F. Delta will publish and pay for Comair's schedules in Delta's Quick
Reference Schedules and System Timetables. Delta will also publish and pay for
Quick Reference Schedules solely including Comair in cities served by Comair but
not served by Delta. The content and format of all such schedules and timetables
will be in Delta's sole discretion.
ARTICLE 3. ACCOUNTING PROVISIONS.
A. Subject to the provisions of Article 6(G) of this Agreement, Comair
will price and process all passenger air transportation and air freight billings
involving Delta through the Airlines' Clearing House (ACH) in accordance with
the procedures set forth from time to time in the ACH Manual of Procedure (the
"Manual"). Without limiting the generality of the foregoing, unless otherwise
agreed to by the parties in writing, all Delta flight coupons of source types
010 (lifts) and 020 (exchanges) issued by Comair and all flight coupons of
source types 010 and 020 issued by or validated on Delta and honored by Comair
will be priced in
-3-
<PAGE> 5
accordance with the procedures set forth in the ACH Sampling Procedures (the
"Sampling Procedures") outlined in Section D of the Manual. Any deviation from
the Sampling Procedures shall be agreed to in writing by the parties.
B. All billings based on the Sampling Procedures shall reflect a
deduction (the "Absorption Ratio," as defined in the Sampling Procedures),
except as otherwise provided below at the applicable rate at the time of the
billing, for prorates, Interline Service Charges, SATO Service Charges,
UATP/credit card discounts (to the extent provided in Article 3(C)(1) below) and
travel agent compensation paid or payable by Delta with respect thereto. The
Absorption Ratio shall be determined and shall be agreed to between Delta and
Comair from time to time in accordance with the Sampling Procedures.
Notwithstanding the foregoing and regardless of whether the coupon is
priced in accordance with the Sampling Procedures or otherwise, Comair shall
deduct from the amount of any billing for Comair coupons relating to Delta Dream
Vacations to the Orient an agency compensation rate of twenty percent (20%)
regardless of the rate paid by Delta, but any such deductions shall not
otherwise affect the interline settlement or processing of coupons provided in
Article 3(A) or this Article 3(B).
C. Credit Card Discount Charges and Dishonored Checks.
1. If a flight operated by Comair is shown in the itinerary of
any Traffic Document (as defined in Article 6(A)) or any ticket written by or
plated on Delta and Delta is not shown in such itinerary (including Traffic
Documents and tickets where Comair is the only airline), Comair will deduct from
its billing to Delta the amount of any credit card discount charges associated
therewith. Comair will use the same procedures used by Delta to verify the
validity of credit cards. As between Comair and Delta, Delta will pay for credit
card discount charges relating to tickets involving itineraries including
flights operated by both Comair and Delta.
2. If a flight operated by Comair is shown in the itinerary of
any Traffic Document or any ticket written by or plated on Delta and Delta is
not shown in such itinerary, Comair will pay Delta the amount of any dishonored
or invalid check associated therewith. Upon such payment, Comair will be
subrogated to all of Delta's rights with respect to such dishonored or invalid
check including, without limitation, the right to take such actions in
-4-
<PAGE> 6
connection with the collection thereof as Comair deems necessary or advisable.
If a flight operated by Delta is shown on any leg in the itinerary of any
Traffic Document issued and sold at any Comair office, Delta will pay Comair the
amount of any dishonored or invalid check associated with such Traffic Document,
provided that Comair has conformed with Delta's check acceptance procedures and
has exhausted all reasonable and customary collection efforts. Upon such
payment, Delta shall be subrogated to all of Comair's rights with respect to
such dishonored or invalid check, including, without limitation, the right to
take such actions in connection with the collection thereof as Delta deems
necessary or advisable.
D. Comair will reimburse Delta for segment fees paid by Delta to vendors
of computer reservations systems ("CRSs") attributable to passengers booked on
Comair flights who do not connect to/from a Delta flight. For purposes of
computing the amount of this reimbursement, the number of Comair passengers that
connect to/from Delta flights in a given month will be divided by the total
number of Comair passengers for such month, and the resulting percentage will
determine, in accordance with the following scale, the percentage of CRS fees
for Comair segments for which Comair is obligated to reimburse Delta:
Percentage of Comair Passengers Percentage of CRS Segment
Connecting to/from Delta Fees Payable by Comair
0-15 85
16-20 80
21-25 75
26-30 70
31-35 65
36-40 60
41-45 55
46-50 50
51-55 45
56-60 40
61-65 35
66-70 30
71-75 25
76-80 20
81-85 15
86-90 10
91-95 5
96+ 0
Payments due hereunder are applicable only to those CRS vendors that now or in
the future provide Delta with a breakdown of Comair segments booked.
-5-
<PAGE> 7
E. Delta agrees to pay Comair a handling fee equal to six percent (6%)
of the coupon value of segments ticketed by Comair on Delta ticket stock and
used for travel on any airline with whom Delta has a ticket handling agreement
that provides for Delta to receive at least a six percent (6%) fee from such
airline. Such fee shall be payable through a six percent (6%) increase in the
aggregate billing value (after application of the applicable Absorption Ratio)
of all such coupons.
ARTICLE 4. AIRPORT RELATED AND TICKETING SERVICES.
A. Comair will provide its own ticketing services. Delta will provide
supplemental ticketing services for Comair at Delta's ticketing locations and
will use Delta ticket stock for such purposes.
B. Delta will design, provide and pay for appropriate airport and other
signage to reflect the Delta Connection and the relationship between Comair and
Delta. The nature and type of such signage will be in the sole discretion of
Delta, subject to any airport, governmental or quasi-governmental restrictions
or requirements. Delta will be responsible for installing and maintaining all
such signage, but the parties will mutually determine which party will obtain
any necessary formal or informal approvals from appropriate airport or other
authorities to install such signage. The parties will fully cooperate with each
other in all endeavors relating to such signage and any necessary approvals.
ARTICLE 5. CUSTOMER SERVICES
A. Comair will handle all customer related services in a professional,
businesslike and courteous manner. In order to insure a high level of customer
satisfaction Comair will:
1. establish and maintain customer handling procedures and policies that
are similar to those utilized by Delta; and
2. establish, maintain and enforce employee conduct, appearance and
training standards and policies that are similar to those utilized by
Delta; provided however, this provision shall not obligate Comair to
establish, maintain or enforce training and/or qualification standards
for flight crews that are similar to Delta's standards.
-6-
<PAGE> 8
B. Comair and Delta will periodically meet to discuss and review
Comair's customer handling procedures and policies and Comair's employee
conduct, appearance and training standards and policies to insure compliance
with this Article 5. Each party will seek to set forth concerns and complaints
under this Article 5 in writing to the other party.
ARTICLE 6. TRAFFIC DOCUMENTS AND RELATED PROCEDURES.
A. Pursuant to mutually acceptable procedures, Delta will
periodically provide Comair with Delta machine and manual ticket stock,
miscellaneous charge orders, credit card refund drafts, credit card refund
vouchers and other related documents (collectively referred to as "Traffic
Documents"). Delta will maintain a supply of Traffic Documents at a suitable
location and, upon written request from Comair, will provide Comair with
appropriate supplies of Traffic Documents.
B. Unless otherwise agreed to by Delta in writing, Traffic
Documents may be used, completed, validated and issued only by Comair.
C. Comair will promptly surrender and return all Traffic
Documents to Delta upon Delta's written request.
D. Comair will maintain records of the Traffic Documents in a
manner and format acceptable to Delta. Comair will acknowledge receipt in
writing of all Traffic Documents in the manner prescribed by Delta.
E. Comair will conform with and abide by all of Delta's rules
and regulations regarding the Traffic Documents.
F. Comair will take all reasonable and necessary measures to
safeguard the Traffic Documents as of the time of receipt and thereafter and
will maintain the Traffic Documents in accordance with mutually agreed upon
security procedures. Comair is responsible for all risk of loss, use, misuse,
misappropriation or theft of Traffic Documents as of the time Comair takes
possession of the Traffic Documents.
-7-
<PAGE> 9
G. Reporting and Remitting With Respect to Traffic Documents.
1. On a daily basis, Comair will provide Delta with a
report for each Comair ticketing location of all ticketing and related
transactions on Traffic Documents for the prior day. Such report will be in a
format determined by Delta and will include, without limitation, all credit card
transactions and supporting documentation.
2. Notwithstanding the provisions of Article 3 of this
Agreement, in consideration of the effect of Comair's use of Traffic Documents
on Comair's cash flow and to accelerate payment to Comair for Comair lifts
included on Traffic Documents, Comair shall retain all monies with respect to
all transactions on Traffic Documents (other than credit card transactions)
issued by Comair ticketing locations. In addition, four times each calendar
month Delta will advance monies to Comair in such amounts and in accordance with
procedures to be mutually agreed upon in writing between the parties. At least
monthly, Delta and Comair will reconcile the aggregate amount of the cash
retained by Comair and the cash advanced by Delta pursuant to this Article
6(G)(2) with amounts owed by either party to the other party under this
Agreement. Within seven (7) days of completing such reconciliation, Comair shall
bill Delta or remit monies to Delta, as applicable, for the reconciled amount.
Final adjustments of such amounts shall be made, as necessary, through ACH.
3. Comair will issue all Traffic Documents, and will
collect appropriate charges, in accordance with the tariffs, fares, rates, rules
and regulations of applicable carriers. Comair is responsible for all
undercharges and incorrect fares, rates and charges on Traffic Documents issued
by or for Comair, and Delta may deduct from sums due Comair or bill Comair for
the amount of any such undercharges or incorrect fares, rates and charges. The
amount of such undercharges will be determined by utilizing the Sampling
Procedures for passenger tickets and on a direct billing basis for baggage/cargo
related items.
4. Comair will reimburse Delta at the rate of three
percent (3%) for all credit card discount charges (other than UATP charges) for
which Comair is responsible pursuant to the provisions of Article 3(C)(1) based
on the Sampling Procedures. Comair will reimburse Delta at the ACH rate for all
UATP credit card charges, or at such other rate as the parties may mutually
agree upon in writing.
-8-
<PAGE> 10
H. Denied Boarding Compensation Vouchers.
Delta will use its best efforts to observe Comair's rules and
regulations regarding procedures for denied boarding. Comair is responsible for
notifying Delta of Comair's denied boarding rules and immediately notifying
Delta of all changes to such rules. Delta is not responsible for, and Comair
will indemnify Delta for, any claims, damages or liabilities which result from
Comair's failure to give such notice, from Delta's payment, failure to pay, or
incorrect payment of denied boarding compensation, or from Delta's failure to
adhere to Comair's denied boarding compensation rules. At its expense, Comair
will provide Delta with its denied boarding compensation vouchers, and Delta is
hereby expressly authorized to issue Comair denied boarding compensation
vouchers on Comair's behalf.
I. Refund Vouchers.
1. Delta will use Delta refund vouchers for all refund
transactions handled by Delta involving Comair.
2. Comair will use Comair refund vouchers for all
refund transactions, other than credit card sales refunds. Comair will use Delta
credit card refund vouchers for credit card sales refunds and will comply with
Delta's rules and regulations for handling and processing such refunds. Delta
will supply Comair with an adequate supply of credit card refund vouchers.
J. Inconvenienced Passengers.
Delta is authorized, but not obligated, to undertake on behalf
of Comair the following actions, to execute the following documents, and
otherwise to take all reasonable measures, in Delta's sole discretion, to
accommodate Comair passengers who may be inconvenienced as a result of any
action or inaction taken by Comair, any action or inaction taken by Delta while
acting on Comair's behalf, or as a result of any happening or occurrence which
is beyond the control of either Comair or Delta:
1. Expense Vouchers - Comair shall provide Delta, at Comair's
expense, with Comair expense vouchers which Delta is
authorized to issue on Comair's behalf to Comair customers who
incur ground transportation, hotel, meal or
-9-
<PAGE> 11
other similar expenses as a result of any Comair flight
cancellation, diversion, delay or similar incident. Comair
will promptly provide Delta with instructions for issuing such
expense vouchers.
2. Expense Checks - Delta may issue Delta's expense checks to
Comair customers in accordance with rules and regulation
established by Comair and provided to Delta. Delta will
periodically invoice Comair for the amount of any expense
checks that are so issued.
3. Petty Cash Disbursements - Delta may make petty cash
disbursements to Comair customers in accordance with rules and
regulations established by Comair and provided to Delta. Delta
will periodically invoice Comair for the amount of any such
petty cash disbursements.
4. Comair S.P.A.N. and Baggage Forwarding Expenses - Delta may
contract on Comair's behalf for the forwarding of Comair
customers' baggage and Comair S.P.A.N. packages to their
appropriate destinations in the event that any such baggage or
package is detained, delayed, misshipped or not shipped. Delta
may either incur such expenses itself and be reimbursed by
Comair or arrange for Comair to be invoiced directly.
ARTICLE 7. TERM AND TERMINATION.
A. This Agreement is effective as of the date first written above and
will continue thereafter until October 31, 1999 unless terminated by either
party on not less than one-hundred eighty (180) days' advance written notice.
B. Either party may terminate this Agreement immediately if the other
party files a voluntary petition in bankruptcy, makes an assignment for the
benefit of creditors, fails to secure dismissal of any involuntary petition in
bankruptcy within sixty (60) days after the filing thereof, or petitions for
reorganization, liquidation, or dissolution under any federal or state
bankruptcy or similar law, or if any such actions are imminent.
-10-
<PAGE> 12
C. Delta may, in Delta's sole discretion, terminate this Agreement if
Comair enters into a letter of intent, or otherwise agrees, to merge into or
with any entity or to be acquired by any entity, unless Comair is the acquiring
or surviving entity.
D. Termination of this Agreement for any reason shall not relieve either
party of rights and obligations incurred prior to the effective date of
termination.
ARTICLE 8. FEES AND CHARGES.
A. Unless expressly provided herein or otherwise agreed to by the
parties in writing, Comair will pay all fees, rentals, charges, costs, taxes,
assessments and other expenses in any way connected with or related to this
Agreement or Comair's business and operations including, but not limited to,
terminal fees and rentals, landing fees and other airport charges. Comair agrees
that notice of any such fees, rentals, charges, costs, taxes, assessments and
other expenses may be served directly on Comair.
B. Comair will reimburse Delta and otherwise pay for all fees, rentals,
charges, costs, taxes and assessments (other than income taxes on the net income
of Delta) and other expenses that are imposed by any governmental or
administrative entity and that are connected with this Agreement or any
services, materials, goods, or other benefits furnished hereunder.
C. Except as otherwise provided herein, Delta will periodically invoice
Comair for any amounts due under this Agreement, and Comair will pay all such
invoices within ten (10) days of receipt.
ARTICLE 9. LIABILITY PROVISIONS.
A. Comair shall be liable for and hereby agrees fully to defend,
release, discharge, indemnify, and hold harmless Delta, its directors, officers,
employees and agents from and against any and all claims, demands, damages,
liabilities, suits, judgments, actions, causes of action, losses, costs and
expenses of any kind, character or nature whatsoever (in each case whether
groundless or otherwise), including attorneys' fees, costs and expenses in
connection therewith and expenses of investigation and litigation thereof, which
may be suffered by, accrued against, charged to, or recoverable from Delta or
its directors, officers, employees or agents in any manner arising out of,
connected with, or attributable to this Agreement, the
-11-
<PAGE> 13
performance, improper performance, or nonperformance of any and all obligations
to be undertaken by Comair pursuant to this Agreement, the loss, theft, use,
misuse or misappropriation of Traffic Documents, or the operation,
non-operation, or improper operation of Comair's aircraft, equipment or
facilities at any location, excluding only claims, demands, damages,
liabilities, suits, judgments, actions, causes of action, losses, costs and
expenses resulting from the gross negligence or willful misconduct of Delta, its
directors, officers, agents or employees. Comair will do all things necessary to
cause and assure, and will cause and assure, that Comair will at all times be
and remain in custody and control of all aircraft, equipment, and facilities of
Comair, and Delta, its directors, officers, employees and agents shall not, for
any reason, be deemed to be in custody or control, or a bailee, of Comair's
aircraft, equipment or facilities.
B. Delta shall be liable for and hereby agrees fully to defend, release,
discharge, indemnify, and hold harmless Comair, its directors, officers,
employees, and agents from and against any and all claims, demands, damages,
liabilities, suits, judgments, actions, causes of action, losses, costs and
expenses of any kind, character or nature whatsoever, including attorneys' fees,
costs and expenses in connection therewith and expenses of investigation and
litigation thereof, which may be suffered by, accrued against, charged to, or
recoverable from Comair or its directors, officers, employees or agents in any
manner arising out of, connected with, or attributable to this Agreement, the
performance, improper performance or nonperformance of any and all obligations
to be undertaken by Delta pursuant to this Agreement, or the operation,
non-operation or improper operation of Delta's aircraft, equipment or facilities
at any location, in each case to the extent, but only to the extent, caused by
Delta's gross negligence or willful misconduct. Delta will do all things
necessary to cause and assure, and will cause and assure, that Delta will at all
times be and remain in custody and control of any aircraft, equipment and
facilities of Delta, and Comair, its directors, officers, employees and agents
shall not, for any reason, be deemed to be in the custody or control, or a
bailee, of Delta's aircraft, equipment or facilities.
C. Comair and Delta agree to comply with all rules, regulations,
directives and similar instructions of appropriate governmental, judicial and
administrative entities including, but not limited to, airport authorities, the
Federal Aviation Administration and the Department of Transportation (and any
successor agencies).
-12-
<PAGE> 14
D. OTHER THAN ANY WARRANTIES SPECIFICALLY CONTAINED IN THIS AGREEMENT,
DELTA DISCLAIMS AND COMAIR HEREBY WAIVES ANY WARRANTIES, EXPRESS OR IMPLIED,
ORAL OR WRITTEN, WITH RESPECT TO THIS AGREEMENT OR DELTA'S PERFORMANCE OF ITS
OBLIGATIONS HEREUNDER INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR INTENDED USE RELATING TO ANY EQUIPMENT, DATA,
INFORMATION OR SERVICES FURNISHED HEREUNDER. COMAIR AGREES THAT DELTA IS NOT
LIABLE TO COMAIR OR ANY OTHER PERSONS FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL
DAMAGES UNDER ANY CIRCUMSTANCES.
ARTICLE 10. WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY
INSURANCE PROVISIONS.
A. Delta's employees, agents and independent contractors under no
circumstances shall be deemed to be, or shall be, employees, agents or
independent contractors of Comair.
B. Comair's employees, agents and independent contractors under no
circumstances shall be deemed to be, or shall be, the employees, agents or
independent contractors of Delta.
C. Each party assumes full responsibility for, and liability to, its own
employees on account of injury, or death resulting therefrom, sustained in the
course of their employment. Each party, with respect to its own employees,
accepts full and exclusive liability for the payment of applicable workers'
compensation and employers' liability insurance premiums with respect to such
employees, and for the payment of all taxes, contributions or other payments for
unemployment compensation and old age benefits, and other similar benefits now
or hereafter imposed upon employers by any government or agency thereof having
jurisdiction in respect of such employee. Each party also agrees to make such
payments and to make and file all reports and returns and to do all things
necessary to comply with all applicable laws at any time imposing such taxes,
contributions, or payments.
-13-
<PAGE> 15
ARTICLE 11. INSURANCE PROVISIONS.
A. Comair shall procure and maintain in full force and effect during the
term of this Agreement policies of insurance of the types and in the minimum
amounts set forth below, with such insurers and under such terms and conditions
as are satisfactory to Delta:
1. All risk hull insurance on an agreed value basis, not to
exceed replacement value except as required by financing
agreements.
2. Comprehensive general liability (premises, products and
completed operations) covering bodily injury, personal injury
and property damage in an amount not less than $200,000,000
per occurrence; provided, however, that non-passenger personal
injury coverage may be limited to $25,000,000 per occurrence.
3. Workers' compensation for statutory limits.
4. Employer's liability in an amount not less than $100,000.
5. Baggage liability in an amount not less than $100,000 per
occurrence.
6. Cargo liability in an amount not less than $100,000 per loss,
casualty or disaster.
7. Automobile liability in an amount not less than $5,000,000.
B. Comair shall cause the policies of insurance described in Article
11(A) above to be duly and properly endorsed by Comair's insurance underwriters
as follows:
1. As to the policies of insurance described in Articles
11(A)(1), (A)(2), (A)(3), (A)(4), (A)(5), (A)(6) and (A)(7):
(a) to provide that any waiver of rights of subrogation
against other parties by Comair will not affect the coverage
provided hereunder with respect to Delta; and (b) to provide
that Comair's underwriters shall waive all subrogation rights
arising out of this Agreement
-14-
<PAGE> 16
against Delta, its directors, officers, employees and agents
without regard to any breach of warranty on the part of
Comair.
2. As to the policies of insurance described in Articles
11(A)(2), (A)(5), (A)(6), and (A)(7): (a) to provide that
Delta, its directors, officers, employees and agents shall be
named as additional insured parties thereunder; and (b) to
provide that such insurance shall be primary insurance.
3. As to the policies of insurance described in Articles 11(A)(2)
and (A)(7): (a) to provide a cross-liability clause as though
separate policies were issued for Delta and Comair and their
respective directors, officers, employees and agents; and (b)
to provide contractual liability insurance coverage.
4. As to any insurance obtained from foreign underwriters, to
provide that Delta may maintain against such underwriters a
direct action in the United States upon such insurance
policies and, to this end, to include a standard service of
process clause designating a United States attorney in
Washington, D.C. or New York, New York.
5. All insurance policies shall provide that the insurance shall
not be invalidated by any action or inaction of Comair.
C. Comair shall cause each of the insurance policies to be duly and
properly endorsed to provide that such policy or policies or any part or parts
thereof shall not be cancelled, terminated or materially altered, changed or
amended by Comair's insurance underwriters until after thirty (30) days' written
notice to Delta, which thirty (30) days' notice shall commence to run from the
date such notice is actually received by Delta.
D. Not later than the effective date of this Agreement, and from time to
time thereafter upon request by Delta, Comair shall furnish Delta evidence
satisfactory to Delta of the aforesaid insurance coverages and endorsements,
including certificates certifying that the aforesaid insurance policy or
policies with the aforesaid limits are duly and properly endorsed as aforesaid
and are in full force and effect.
-15-
<PAGE> 17
E. In the event Comair fails to maintain in full force and effect any of
the insurance and endorsements required to be maintained by Comair pursuant to
Article 11(A), Delta shall have the right (but not the obligation) to procure
and maintain such insurance or any part thereof on behalf of Comair. The cost of
such insurance shall be payable by Comair to Delta upon demand by Delta. The
procurement of such insurance or any part thereof by Delta does not discharge or
excuse Comair's obligation to comply with the provisions set out herein. Comair
agrees not to cancel, terminate or materially alter, change or amend any of the
policies until after providing thirty (30) days' advance written notice to Delta
of Comair's intent to so cancel, terminate or materially alter, change or amend
such policies of insurance, which thirty (30) day notice period shall commence
to run from the date notice is actually received by Delta.
F. During the term of this Agreement, Comair agrees to maintain on
deposit with the Department of Transportation a signed counterpart of the
interim "Montreal Agreement" (Agreement CAB 18900), which has the effect of
increasing the limits of liability under the Warsaw Convention to seventy-five
thousand dollars ($75,000.00). Comair further agrees to be bound by Agreement
CAB 18900 and any subsequent amendment thereto or any subsequent order of the
Department of Transportation or protocol ratified by the United States
government which relates to or modifies the limit of liability under the Warsaw
Convention.
G. With respect to all claims against Comair (but not against Delta)
with respect to which Comair is not entitled to be indemnified by Delta pursuant
to Article 9(B), whether or not covered by the insurance policies set forth in
this Article 11 or otherwise, Delta is responsible only for filing an initial
report and has no other obligations with respect to such claims, and Comair is
fully responsible for handling all adjustments, settlements, negotiations,
litigation and similar activities in any way related to or connected with such
claims.
H. The parties hereby agree that from time to time during the term of
this Agreement Delta may require Comair to procure and maintain insurance
coverages in amounts in excess of the minimum amounts set forth in Article 11(A)
should the circumstances and conditions of Comair's operations under this
Agreement be deemed, in Delta's sole discretion, to require reasonable increases
in any or all of the foregoing minimum insurance coverages.
-16-
<PAGE> 18
ARTICLE 12. OPERATIONS OF COMAIR AS A DELTA CONNECTION CARRIER.
A. Nothing in this Agreement confers any rights on either party to
restrict the other party's ability: (1) to maintain or change rates, fares,
tariffs, markets, schedules, equipment, services, distribution and marketing
methods, competitive strategies or similar matters; (2) to engage in vigorous
and full competition with other entities; or (3) to do business, or choose not
to do business, with other entities. Notwithstanding the foregoing, Comair
acknowledges and agrees that participation in the Delta Connection program
obligates Comair to offer and maintain a professional, high quality level of
service in terms of schedules, customer service and the like. Accordingly, not
less than once each year during the term of this Agreement, the parties will:
(a) meet to mutually review and discuss the services, operations and plans of
Comair and Delta for the Delta Connection program; and (b) jointly develop a
written business plan for the Delta Connection operations and services of
Comair. Comair will comply with the business plans so developed and all
reasonable recommendations of Delta in this area. Delta acknowledges that such
business plans are subject to change as facts and circumstances require. Delta
further acknowledges that Delta will consider in good faith all reasonable
recommendations of Comair.
B. During the last quarter of each calender year, Delta and Comair shall
jointly develop an advertising budget and program for the next succeeding
calendar year (or portion thereof) during the term of this Agreement for
promoting the Delta Connection and the relationship between Delta and Comair
established by this Agreement. Delta shall be responsible for the development
and production of all promotional materials for the program, all of which shall
be subject to the prior approval of Comair. Comair agrees to pay Delta fifty
percent (50%) of the actual publication or other media costs of each
advertisement or other material promoting the Delta/Comair Connection during
such year. Delta will bill Comair quarterly for its share of the actual costs of
the advertising program, each such billing to be accompanied by paid invoices
and, if applicable, tear sheets evidencing such costs. Comair shall pay any such
billing within thirty (30) days of receipt. Any material deviations by Delta
from the agreed advertising program or the incurrence by Delta of any
advertising cost that will cause the total advertising budget to be exceeded
shall be approved in advance by Comair.
-17-
<PAGE> 19
ARTICLE 13. CONTRACT INTERPRETATION.
A. This Agreement is subject to, and will be governed by and interpreted
in accordance with, the laws of the State of Georgia and of the United States of
America.
B. The descriptive headings of the several articles and sections of this
Agreement are inserted for convenience only, confer no rights or obligations on
either party, and do not constitute a part of this Agreement.
C. Time is of the essence in interpreting and performing this Agreement.
D. This Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof, and any other prior or
contemporaneous agreements, whether written or oral, with respect thereto
including, without limitation, the 1986 Agreement, are expressly superceded
hereby; provided, however, that neither Delta nor Comair shall be relieved of
any rights or obligations arising under the 1986 Agreement on or prior to the
date of this Agreement.
E. If any part of any provision of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective to the extent
of such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provision or the remaining provisions.
F. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which, taken together, shall
constitute one and the same instrument.
ARTICLE 14. CIRCUMSTANCES BEYOND THE PARTIES' CONTROL.
With the exception of outstanding rights and obligations, each party will be
relieved of its obligations under this Agreement in the event, to the extent and
for the period of time that performance is delayed or prevented by any cause
reasonably beyond that party's control.
-18-
<PAGE> 20
ARTICLE 15. NO LICENSE GRANTED.
This Agreement is not, and shall not be construed to be, a license for either
party to use the trade names, trademarks, service marks, or logos of the other
party without such party's prior written consent.
ARTICLE 16. MODIFICATION AND WAIVER.
No amendment, modification, supplement, termination or waiver of any provision
of this Agreement, and no consent to any departure by either party therefrom,
shall in any event be effective unless in writing signed by authorized
representatives of both parties, and then only in the specific instance and for
the specific purpose given.
ARTICLE 17. NOTICES.
Unless otherwise provided herein, all notices, requests and other
communications required or provided for hereunder shall be in writing (including
telecopy or similar teletransmission or writing) and shall be given at the
following addresses:
(1) if to Delta:
Mr. W. Whitley Hawkins
Senior Vice President-Marketing
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
Telecopy: (404) 765-5494
(2) If to Comair:
Comair, Inc.
Post Office Box 75021
Greater Cincinnati Airport
Cincinnati, Ohio 45275
Attention: Mr. David Mueller, President
Telecopy: (606) 525-3420
-19-
<PAGE> 21
Any such notice, request or other communication shall be effective (i) if given
by mail, upon the earlier of receipt or the third business day after such
communication is deposited in the United States mails, registered or certified,
with first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means including, without limitation, by air courier, when delivered at the
address specified herein. Delta or Comair may change its address for notice
purposes by notice to the other party in the manner provided herein.
ARTICLE 18. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of Delta and Comair and their
respective successors and assigns; provided, however, neither party may assign
or transfer this Agreement or any portion hereof to any person or entity without
the express written consent of the other party. Any assignment or transfer, by
operation of law or otherwise, without such consent shall be null and void and
of no force or effect.
* * *
IN WITNESS WHEREOF, the parties have executed this Agreement by their
undersigned duly authorized representatives:
COMAIR, INC. DELTA AIR LINES, INC.
By: /s/ David R. Mueller By: /s/ W. Whitley Hawkins
--------------------------------- -------------------------------------
W. Whitley Hawkins
Title: President Senior Vice President -
Marketing
-20-
<PAGE> 1
EXHIBIT (c)(21)
CONFIDENTIALITY AGREEMENT
<PAGE> 2
EXHIBIT (c)(21)
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> 3
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 of this letter agreement until the first
anniversary of the date of this letter agreement, neither you
<PAGE> 4
3
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 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
<PAGE> 5
4
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 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
<PAGE> 6
5
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> 7
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 D. Rademacher
-------------------------------------
Name: Randy D. Rademacher
Title: Senior VP Finance and CFO
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 VP and CFO
