-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AQ/8bHeI8Ovit8q9+ZdElSW+/r1+aHXeUNbX+E9SibrrXxnseEg5ArKJLEsUqihp qyO7Ms9TmRqfmwnotqeIPg== 0000950103-99-000951.txt : 19991102 0000950103-99-000951.hdr.sgml : 19991102 ACCESSION NUMBER: 0000950103-99-000951 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19991101 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COMAIR HOLDINGS INC CENTRAL INDEX KEY: 0000835344 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 311243613 STATE OF INCORPORATION: KY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: SEC FILE NUMBER: 005-40608 FILM NUMBER: 99738901 BUSINESS ADDRESS: STREET 1: P O BOX 75021 CINCINNATI NORTHERN STREET 2: KENTUCKY INTERNATIONAL AIRPORT CITY: CINCINNATI STATE: OH ZIP: 45275 BUSINESS PHONE: 6067672550 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DELTA AIR LINES INC /DE/ CENTRAL INDEX KEY: 0000027904 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 580218548 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: HARTSFIELD ATLANTA INTL AIRPORT STREET 2: 1030 DELTA BLVD CITY: ATLANTA STATE: GA ZIP: 30320-6001 BUSINESS PHONE: 4047152600 MAIL ADDRESS: STREET 1: 1030 DELTA BLVD STREET 2: DEPT 971 CITY: ATLANTA STATE: GA ZIP: 30320-6001 FORMER COMPANY: FORMER CONFORMED NAME: DELTA AIR CORP DATE OF NAME CHANGE: 19660908 SC 14D1/A 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- SCHEDULE 14D-1/A TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. 1) ----------------------- COMAIR HOLDINGS, INC. (Name of Issuer) DELTA AIR LINES, INC. DELTA AIR LINES HOLDINGS, INC. KENTUCKY SUB, INC. ----------------------- Common Stock, No Par Value (Title of Class of Securities) ----------------------- 199789 10 8 (CUSIP Number of Class of Securities) ----------------------- Robert S. Harkey, Esquire Senior Vice President - General Counsel Delta Air Lines, Inc. Hartsfield Atlanta International Airport Atlanta, Georgia 30320 (404) 715-2387 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidders) ----------------------- With Copies to: Joseph Rinaldi Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 (212) 450-4000 ----------------------- October 22, 1999 (Date Tender Offer First Published, Sent or Given to Security Holder) ================================================================================ CUSIP No. 199789 10 8 - -------------------------------------------- 14D-1/A - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS Delta Air Lines, Inc. IRS IDENTIFICATION NO. 58-0218548 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS BK - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - -------------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 21,072,655 - -------------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 22.06% - -------------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- 2 CUSIP No. 199789 10 8 - -------------------------------------------- 14D-1/A - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS Delta Air Lines Holdings, Inc., a wholly owned subsidiary of Delta Air Lines, Inc. IRS IDENTIFICATION NO. 51-0323487 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* AF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - -------------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 21,072,655 - -------------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 22.06% - -------------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- 3 CUSIP No. 199789 10 8 - -------------------------------------------- 14D-1/A - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS Kentucky Sub, Inc., an indirect wholly owned subsidiary of Delta Air Lines, Inc. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) [ ] - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION KENTUCKY - -------------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 21,072,655 - -------------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 22.06% - -------------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- 4 This Amendment No.1 amends and supplements the Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") filed on October 22, 1999 by (i) Delta Air Lines, Inc., a Delaware corporation ("Delta"), (ii) Kentucky Sub, Inc., a Kentucky corporation and an indirect, wholly owned subsidiary of Delta ("Kentucky Sub") and (iii) Delta Air Lines Holdings, Inc., a Delaware corporation and a direct wholly-owned subsidiary of Delta, relating to the offer by Kentucky Sub to purchase all of the issued and outstanding shares (the "Shares") of common stock, no par value, of Comair Holdings, Inc., a Kentucky corporation ("Comair"), at a price of $23.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 22, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which together constitute the "Offer"), copies of which are attached as Exhibits (a)(1) and (a)(2) to the Schedule 14D-1. Capitalized terms not separately defined herein shall have the meanings specified in the Schedule 14D-1. Item 10. Additional Information Item 10(e) is hereby amended and supplemented as follows: On October 19, 1999, an action styled Schear v. Comair Corporation, et al., Index No. 99-CI-1213, was commenced by a purported Comair shareholder in the Boone County Circuit Court, Commonwealth of Kentucky. On October 22, 1999, an action styled Amend v. Comair Holdings, Inc., et al., Index No. 99-CI-01233, was commenced by a purported Comair shareholder in the same court. On October 25, 1999, an action styled Barnett v. Comair Holdings, Inc., et al., Index No. 99-CI-01242, was commenced by a purported Comair shareholder in the same court. On October 28, 1999, plaintiffs in those three actions filed a first amended consolidated class action complaint in the Boone County Circuit Court, under the caption Schear v. Comair Corporation, et al., Index No. 99-CI-1213, a copy of which is attached to this Amendment No. 1 as Exhibit (g)(3) and is incorporated herein by reference. On October 29, 1999, the Boone County Circuit Court consolidated the three actions. The amended complaint names as defendants Comair, the members of the Comair Board and Delta and seeks to proceed on behalf of a purported class of Comair shareholders other than the defendants. It alleges that the price for Comair shares agreed to in the Merger Agreement is inadequate, that the members of the Comair Board breached their fiduciary duties to Comair shareholders by allegedly failing to thoroughly investigate the value of Comair before entering into the Merger Agreement, and that Delta purportedly aided and abetted these alleged breaches of duty, and among other things also makes other related claims against the Comair Board and Comair's financial advisor, Morgan Stanley Dean Witter. The amended complaint seeks preliminary and permanent injunctive relief against the Transaction, compensatory and/or rescissory damages in an unspecified amount and plaintiffs' costs and attorneys' fees. On October 28, 1999, an action styled Deutch v. Mueller, et al., Case No. A9906534, was commenced by a purported Comair shareholder in the Court of Common Pleas of Hamilton County, Ohio. A copy of the complaint is attached to this Amendment No. 1 as Exhibit (g)(4) and is incorporated herein by reference. The complaint in the Deutch action names as defendants Comair, the members of the Comair Board and Delta. It makes allegations and seeks relief substantially similar to the allegations made and relief sought in the Schear amended complaint and in the Barkley complaint. On October 27, 1999, plaintiff in the Barkley action filed an ex parte motion for temporary restraining order, seeking a temporary restraining order enjoining the Offer and the Merger and invalidating certain provisions of the Merger Agreement. Plaintiff in the Barkley action also sought expedited discovery. At a hearing before the Jefferson County Circuit Court on October 28, 1999, those applications were presented by the plaintiffs. On October 29, 1999, the Court issued an opinion and order denying plaintiff's motions. A copy of the opinion and order is attached to this Amendment No. 1 as Exhibit (g)(5) and is incorporated herein by reference. On October 22, 1999, plaintiffs in the Schear action filed a motion for expedited discovery and preliminary injunctive relief, seeking among other things a temporary injunction preventing the closing of the Offer and directing that expedited discovery occur. Argument on plaintiffs' motion was presented by the parties at a hearing before the Boone County Circuit Court on October 29, 1999. At the conclusion of the hearing, the Court denied the motion for a preliminary injunction and overruled the motion for expedited discovery. Comair, the Comair Board and Delta believe that the claims asserted against them in all of the foregoing cases are without merit and intend to defend these lawsuits vigorously. Item 11. Material to Be Filed as Exhibits Item 11 is supplemented as follows: (g)(3) Plaintiff's First Amended Consolidated Class Action Complaint filed on October 28, 1999 in the Circuit Court of Boone County, Kentucky in an action entitled Schear v. Comair Corporation, et al. (g)(4) Class Action Complaint filed on October 28, 1999 in the Court of Common Pleas of Hamilton County, Ohio in an action entitled Deutch v. Mueller, et al. (g)(5) Opinion and Order in Barkley v. Comair Holdings, Inc., et al. 6 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 1, 1999 DELTA AIR LINES, INC. By: /s/ M. Michele Burns ----------------------------- Name: M. Michele Burns Title: Vice President and Treasurer DELTA AIR LINES HOLDINGS, INC. By: /s/ Leslie P. Klemperer ----------------------------- Name: Leslie P. Klemperer Title: Vice President and Secretary KENTUCKY SUB, INC. By: /s/ Dean C. Arvidson ----------------------------- Name: Dean C. Arvidson Title: Secretary EXHIBIT INDEX Exhibit No. - ------- (g)(3) Plaintiff's First Amended Consolidated Class Action Complaint filed on October 28, 1999 in the Circuit Court of Boone County, Kentucky in an action entitled Schear v. Comair Corporation, et al. (g)(4) Class Action Complaint filed on October 28, 1999 in the Court of Common Pleas of Hamilton County, Ohio in an action entitled Deutch v. Mueller, et al. (g)(5) Opinion and Order in Barkley v. Comair Holdings, Inc. et al. EX-99.(G)(3) 2 EXHIBIT (g)(3) BOONE COUNTY CIRCUIT COURT COMMONWEALTH OF KENTUCKY NEAL SCHEAR, and ) STEVE FRANKLIN, CO-TRUSTEE FOR THE ) DAVID H. LIEBSCHUTZ IRREVOCABLE TRUST, )Index No. 99-CI-1213 on behalf of themselves and all others )Judge Bamberger similarly situated, ) ) Plaintiffs, ) vs. ) ) COMAIR HOLDINGS, INC., DELTA AIR LINES, ) INC., DAVID R. MUELLER, RAYMOND A. ) MUELLER, ROBERT H. CASTELLINI, ) CHRISTOPHER J. MURPHY, III, PETER H. ) FORSTER, JOHN A. HAAS, GERALD L. WOLKEN, ) and DAVID A. SIEBENBURGEN ) Defendants. ) ) ) ) ) - -------------------------------------------- ) GREGORY T. AMEND, on behalf of ) himself and all others similarly situated, )Index No. 99-CI-1233 )Judge Bamberger Plaintiffs, ) vs. ) )PLAINTIFFS' FIRST COMAIR HOLDINGS, INC., DELTA AIR LINES, )AMENDED CONSOLIDATED INC., DAVID R. MUELLER, RAYMOND A. )CLASS ACTION COMPLAINT )---------------------- MUELLER, ROBERT H. CASTELLINI, ) CHRISTOPHER J. MURPHY, III, PETER H. ) FORSTER, JOHN A. HAAS, GERALD L. WOLKEN, ) and DAVID A. SIEBENBURGEN ) Defendants. ) ) - -------------------------------------------- )Index No. 99-CI-1242 ARNOLD R. BARNETT, on behalf of )Judge Bamberger himself and all others similarly situated, ) ) Plaintiffs, ) vs. ) ) COMAIR HOLDINGS, INC., DELTA AIR LINES, ) INC., DAVID R. MUELLER, RAYMOND A. ) MUELLER, ROBERT H. CASTELLINI, ) CHRISTOPHER J. MURPHY, III, PETER H. ) FORSTER, JOHN A. HAAS, GERALD L. WOLKEN, ) and DAVID A. SIEBENGURGEN ) ) Defendants ) ) PLAINTIFFS' FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Plaintiffs, as and for their class action complaint, allege upon personal knowledge as to themselves and their own acts, and upon information and belief derived from, inter alia, a review of documents filed with the Securities Exchange Commission and publicly available news sources, such as newspaper articles, as to all other matters, as follows: NATURE OF THE ACTION 1. This is a shareholder class action on behalf of the stockholders of Comair Holdings, Inc. ("Comair" or the "Company") against its directors and others to enjoin defendants' actions related to the sale of Comair to defendant Delta Air Lines, Inc. ("Delta"), and to obtain other appropriate relief. PARTIES 2. Plaintiff, Neal Schear, owns shares of Comair common stock, and has owned them at all relevant times. 3. Plaintiff, Steve Franklin, Co-Trustee for the David H. Liebschutz Irrevocable Trust, owns shares of Comair common stock and has owned them at all relevant times. 4. Plaintiff, Gregory T. Amend, owns shares of Comair common stock, and has owned them at all relevant times. 5. Plaintiff, Arnold R. Barnett, owns shares of Comair common stock, and has owned them at all relevant times. 2 6. Arnold R. Barnett controls, through various family accounts, approximately 80,000 shares of Comair. 7. Defendant Comair is a Kentucky corporation and is headquartered at the Cincinnati/Northern Kentucky International Airport in Hebron, Kentucky. 8. Delta owns approximately twenty-two percent of Comair's outstanding common stock. Comair is designated "Delta Connection" carrier, and operates all its flights under the DL code. Under a marketing agreement, Comair is able to offer passengers joint fares, coordinated schedules for timely connections and Delta frequent flier mileage. Additionally, in return for set fees, Delta handles Comair's reservations and handles flights at some airport locations. Approximately forty-five percent of Comair's passengers in fiscal year 1999 connected with Delta flights. Comair's service as a Delta Connection carrier is performed under a ten year marketing agreement, which was entered into in October 1989. Delta's ability to renew or not to renew that marketing agreement in October 1999 gave it significant leverage over Comair and the Individual Defendants, particularly since the Individual Defendants apparently failed to exercise their fiduciary duties and prepare for the possibility that Delta might not renew by adequately exploring alliances with other major airlines. 9. Defendant Delta is a corporation duly organized and existing under the law of the state of Delaware, with its principal executive offices located at 1030 Delta Boulevard, Hartsfield Atlanta International Airport, Atlanta, Georgia. Delta is the third largest airline based in the United States and operates a hub and spoke flight system from a number of hubs, including Atlanta, Cincinnati/ Northern Kentucky, Salt Lake City and Orlando. 3 10. Defendants David R. Mueller, Raymond A. Mueller, Robert H. Castellini, Christopher J. Murphy, III, Peter H. Forster, John A. Haas, Gerald L. Wolken and David A. Siebenburgen (the "Individual Defendants") are all members of Comair's board of directors. In addition, defendant David R. Mueller is Chairman and CEO of Comair. 11. By virtue of their positions as directors, and where applicable, officers of Comair and/or their exercise of control and ownership over the business and corporate affairs of Comair, the Individual Defendants have, and at all relevant times had, the power to control and influence and did control and influence and cause Comair to engage in the practices complained of herein. Each Individual Defendant owed and owes Comair and its shareholders, fiduciary obligations and were and are required to: (1) use their ability to control and manage Comair in a fair, just and equitable manner; (2) act in furtherance of the best interests of Comair and its shareholders; (3) act to maximize shareholder value in connection with any change in ownership and control; (4) govern Comair in such a manner as to heed the expressed views of its public shareholders; (5) refrain from abusing their positions of control; and (6) not to favor their own interests at the expense of Comair and its public shareholders. 12. Each defendant herein is sued individually and/or as a conspirator and aider and abettor. The Individual Defendants are also sued in their capacity as directors of Comair. The liability of each defendant arises from the fact that they have engaged in all or part of the unlawful acts, plans, schemes, or transactions complained of herein. CLASS ACTION ALLEGATIONS 13. Plaintiffs bring this action as a class action pursuant to Kentucky Civil Rule 23 et. seq. on behalf of all Comair common stock holders. Excluded from the class are defendants, 4 members of the immediate families of the defendants, their heirs and assigns, and those in privity with them. 14. The members of the Class are so numerous that joinder of all of them would be impracticable. While the exact number of Class members is unknown to plaintiffs, and can be ascertained only through appropriate discovery, plaintiffs believe there are thousands of Class members. Comair has over 95 million shares of common stock outstanding. 15. Plaintiffs' claims are typical of the claims of the Class, since plaintiffs and the other members of the Class have and will sustain damages arising out of defendants' breaches of their fiduciary duties. Plaintiffs do not have any interests that are adverse or antagonistic to those of the Class. Plaintiffs will fairly and adequately protect the interests of the Class. Plaintiffs are committed to the vigorous prosecution of this action and have retained counsel competent and experienced in this type of litigation. 16. There are questions of law and fact common to the members of the Class that predominate over any questions which, if they exist, may affect individual class members. The predominant questions of law and fact include, among others, whether: (a) the defendants have and are breaching their fiduciary duties to the detriment of Comair shareholders; (b) the Class has been damaged and the extent to which members of the Class have sustained damages, and what is the proper measure of those damages. 17. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy, since joinder of all members is impracticable. Further, as individual damages may be relatively small for most members of the Class, the burden and expense of prosecuting litigation of this nature makes it unlikely that members of the Class 5 would prosecute individual actions. Plaintiffs anticipate no difficulty in the management of this action as a class action. Further, the prosecution of separate actions by individual members of the class would create a risk of inconsistent or varying results, which may establish incompatible standards of conduct for defendants. SUBSTANTIVE ALLEGATIONS 18. On October 18, 1999, Delta announced that it had agreed to purchase the seventy- eight percent of Comair stock that it does not already own for $23.50 a common share. The announcement said that when the acquisition was completed, Comair would become a wholly owned unit of Delta, and that the directors of both Comair and Delta had approved the transaction. 19. Delta's proposed purchase price is substantially below Comair's average stock price for the year to date, which ranged as high as $29.12 per share. Delta used its ability to forestall and manipulate negotiations for another ten-year Delta Connection Agreement with Comair to drive down the price of Comair stock prior to making its acquisition proposal. The existing Delta Connection Agreement was set to expire on October 31, 1999. Securities analysts agree that the price that Delta has offered for Comair shares is too low. "We felt the common shareholders are leaving money on the table for Comair," said Mike Dempsey, vice-president for Robert W. Baird & Co. "We were quite surprised - $23.50 was low for Comair. We felt it would come in a little higher," said Tracy Barker, first vice-president of Gradison McDonald Investments. 20. Plaintiff Arnold R. Barnett further alleges that he was informed by a Comair board member that Delta specifically threatened to do the following: a. crush Comair by flying Delta planes on Comair routes, even if it meant that the Delta planes would be largely empty; 6 b. engage in a hostile takeover for Comair; and c. bring in another regional airline to compete with Comair on Comair's existing routes. 21. By entering the agreement with Delta, the Individual Defendants have allowed the price of Comair stock to be capped, thereby depriving plaintiff and the Class of the opportunity to realize any increase in the value of Comair shares. Despite the obvious long-term value of the Comair acquisition for Delta, Comair shareholders will be receiving an inadequate and unfair takeover premium over Comair's stock price prior to announcement of the transaction, and inadequate value in relation to Comair's contribution to the pro forma combined value of the two firms. This is particularly so since Comair had traded at almost $30 per share earlier in the year. Further, the substantial benefits which Delta will gain by virtue of acquiring Comair are not being adequately compensated for sale price. 22. By entering into negotiations with Delta, Comair's board had initiated a process to sell Comair, which imposes heightened fiduciary responsibilities and requires enhanced scrutiny by the Court. However, the terms of the proposed transaction were not the result of an auction process or active market check. Rather, they were arrived at without a full and thorough investigation by the Individual Defendants; and the price and process was intrinsically unfair and inadequate from the standpoint of Comair's shareholders. 23. The Individual Defendants failed to make an informed decision, as no market check of Comair's value was obtained. In agreeing to the merger, the Individual Defendants failed to properly inform themselves of Comair's highest transactional value. In fact, according to Delta's 14-D filed October 22, 1999, defendants instructed their financial advisor, Morgan Stanley, to 7 not solicit interest from any party with respect to the acquisition of Comair or any of its assets other than Delta. 24. The Individual Defendants have violated the fiduciary duties they owe to the shareholders of Comair. The Individual Defendants agreement to the terms of the transaction, its timing, and the failure to auction Comair and invite other bidders, and defendants failure to provide a market check, demonstrate a clear absence of the exercise of due care and of loyalty to Comair's public shareholders. 25. The Individual Defendants fiduciary obligations under the circumstances of Delta's offer obligated them to: Undertake an appropriate evaluation of Comair's net worth as a merger/acquisition candidate, taking into account its long term prospects, and the substantially higher price at which Comair's stock had traded earlier in the year; Actively evaluate the proposed transaction and engage in a meaningful auction with third parties in an attempt to obtain the best value for Comair's public shareholders; Act independently so that the interests of Comair's public shareholders will be protected and enhanced; and Adequately ensure that no conflicts of interest exist between the Individual Defendants own interests and their fiduciary obligations to maximize shareholder value nor did they adequately ensure that no conflicts of interest existed between Morgan Stanley, Comair's financial advisor, and Delta, or, if such conflicts exist, to ensure that all conflicts are resolved in the best interests of Comair's public shareholders. 26. The Individual Defendants have breached their fiduciary duties by reason of the acts and transactions complained of herein, including their decision to sell Comair to Delta without making the requisite effort to obtain the best offer possible. 27. Plaintiffs and other members of the Class have been and will be damaged in that they have not and will not receive their fair proportion of the value of Comair's assets and 8 business, will be divested from their right to share in Comair's future growth and development and have been and will be prevented from obtaining a fair and adequate price for their shares of Comair common stock. 28. The consideration to be paid to class members in the proposed merger is unfair and inadequate because, inter alia,: The intrinsic value of Comair's common stock is in excess of the amount offered by Delta, giving due consideration to the current decline of Comair's stock from its yearly high (due in substantial measure to Delta's manipulation of negotiations relating to the extension of Delta's marketing contract with Comair), its anticipated operating results, net asset value, cash flow, profitability and established markets; The sale price is not the result of an appropriate consideration of the value of Comair because the Comair board approved the proposed transaction without undertaking steps to accurately ascertain Comair's value through open bidding or at least a market check mechanism; The terms of the proposed merger fail to include appropriate mechanisms to protect class members against a decline in the price of Comair stock; and The Individual Defendants did not appoint or retain any truly independent person or entity to negotiate for or on behalf of Comair's public shareholders to promote their best interests in the merger transaction. 29. The Individual Defendants have breached their duty of loyalty to Comair's public shareholders by using their control of Comair to force plaintiffs and the Class to exchange their equity interest in Comair for unfair consideration, and to deprive Comair's public shareholders of the maximum value to which they are entitled. 30. The Individual Defendants also breached their fiduciary duties to the shareholders by not creating a committee of outside directors to weigh the merits of the Merger Agreement 9 and all the other alternatives available to Comair, independent of the influence of the inside directors. 31. The terms of the proposed merger are grossly unfair to the class, and the unfairness is compounded by the gross disparity between the knowledge and information possessed by the Individual Defendants by virtue of their positions of control of Comair and that possessed by Comair's public shareholders. Defendants' intent is to take advantage of this disparity and to induce class members to relinquish their Comair shares at an unfair price on the basis of incomplete or inadequate information. 32. Delta has knowingly aided and abetted the breaches of fiduciary duty committed by the Individual Defendants. Further, the proposed sale of Comair to Delta could not take place without the knowing participation of Delta. 33. By reason of the foregoing, plaintiffs and each member of the Class are suffering irreparable injury and damages. 34. Additionally, according to the Merger Agreement, two thirds of Comair stock must be tendered before Delta can claim that the buyout of Comair is complete. As such, Comair's shareholders have a critical obligation in determining whether Comair remains an independent company or whether it becomes a Delta subsidiary. However, the shareholders cannot make an informed decision as to whether to tender their shares when the information provided by Comair and Delta materially misstates the value of those shares. Allowing the Offer to proceed effectively takes the important decision afforded the shareholders out of their hands and puts it in the hands of the clock, forcing the shareholders to decide the issue essentially blindfolded. For example, the Notice of Guaranteed Delivery, which is sent to every Comair shareholder, 10 misleads the class into believing that the merger is final and they are required to tender their shares. Specifically, the Notice provides that the form "must be used." Several Comair shareholders already have been mislead by that language into believing that they have no choice but to tender their shares. There is no adequate remedy at law that protects for the shareholders the ability to make an informed decision as to whether or not Comair remains an independent company. 35. Enjoining the Offer from proceeding, or requiring that the Offer remain open would not have any material impact on Delta or on Comair because the Merger Agreement authorizes both that the Offer can be extended and that the Delta Connection Agreement, set to expire on October 31, 1999 will be extended on a month to month basis. Also, according to the 14-D, both Comair's and Delta's timeline for completing the buyout extends to April 30, 2000. As such, extending the period for meeting the necessary criteria for the buyout has already been incorporated into the Merger Agreement's buyout price. 36. Plaintiffs and other members of the Class have no adequate remedy at law. INDIVIDUAL DEFENDANTS BREACHED THEIR FIDUCIARY DUTY BY KNOWINGLY RELYING ON MORGAN STANLEY'S FAIRNESS OPINION WHICH FAILS TO MEET BASIC STANDARDS OF OBJECTIVITY 37. The Individual Defendants knew or should have known that Morgan Stanley was not a disinterested financial advisor to Comair regarding the fairness of Delta's buyout offer, and, as such, their reliance on Morgan Stanley's fairness opinion was unjustified. 38. According to the Form 14-D filed by Delta on October 22, 1999 ("Form 14-D"), Morgan Stanley will receive a fee of $10,000,000 if the buyout is consummated. If the buyout is 11 not consummated Morgan Stanley receives a fee based upon the hours worked as Comair's financial advisor for the roughly three months work they performed. Pursuant to a letter agreement between Comair and Morgan Stanley, dated September 23, 1999, Comair has agreed to pay Morgan Stanley: (A) if no Merger Agreement is entered into, an "Advisory Fee" calculated depending upon the amount of time spent on assignments, or (B) if the Offer is consummated, a "Transaction Fee" equal to $10,000,000 against which any Advisory Fee will be credited. The full amount of the Transaction Fee is to be paid by Comair when control of 50% or more of the Shares changes hands. In addition to any fees for professional services, Morgan Stanley will also be reimbursed for expenses incurred in connection with Morgan Stanley's representation of Comair. 39. Comair has also agreed to indemnify Morgan Stanley for liability in connection with the work they performed for Comair, thereby removing an important check on Morgan Stanley's work product. Comair has also agreed to indemnify Morgan Stanley and its affiliates against certain liabilities, including liabilities under the federal securities laws, related to, arising out of or in connection with the engagement of Morgan Stanley by Comair. 40. Moreover, Comair's Board of Directors retained Morgan Stanley on or shortly after August 10, 1999, for the purpose of exploring Comair's ongoing business options in light of the impending October 31, 1999 expiration of the Delta connection agreement. The Individual Defendants knew or should have known that, less than one month prior, Morgan Stanley performed significant work for Delta on various financial matters, receiving substantial fees in return. In December 1998, Morgan Stanley acted as agent in connection with a private placement of Delta notes for which Delta paid Morgan Stanley a fee not in excess of $200,000, and such fee was the only fee paid by Delta to Morgan Stanley in 1998. In July 1999, Morgan Stanley acted as one of 12 two "joint bookrunners" for Delta's public offering of $537.5 million principal amount of 8 1/8% Notes due July 1, 2039. Also in July 1999, Morgan Stanley acted as solicitation agent for a consent solicitation by Delta in respect of certain privately held debt securities; Delta paid Morgan Stanley a fee of $500,000 for serving in this capacity. Morgan Stanley and its affiliates may maintain relationships with Comair and Delta in the future. 41. Comair's Board of Directors also knew or should have known that Morgan Stanley's fairness opinion substantially and materially undervalued the value of Comair's stock. THE DIRECTORS' OBJECTIVITY WAS BOUGHT OFF BY FINANCIAL INCENTIVES IN THE TENDER OFFER 42. The directors of Comair owe a fiduciary duty to act in the shareholders best interests. However, the Tender Offer provides that the directors receive substantial financial and other benefits in the event that Delta's buyout of Comair is consummated. 43. According to the 14-D, Defendants Mueller and Siebenburgen receive the following compensation if the buyout is successful: Mr. Mueller is employed as the Chief Executive Officer and Chairman of the Board of Directors of Comair and has a base salary of $550,000. Mr. Siebenburgen is employed as President and Chief Operating Officer of Comair and has a base salary of $500,000. Upon a "Change in Control" of Comair, the employment agreements will terminate and (A) Mr. Mueller will be entitled to a lump-sum payment equal to three times the sum of (i) his base salary in effect at the termination date, (ii) the average annual bonus compensation payable to Mr. Mueller during the prior three fiscal years plus (iii) his average annual award under Comair's Deferred Compensation Incentive Plan during the prior three fiscal years, and (B) Mr. Siebenburgen will be entitled to a lump-sum payment equal to three times the sum of (i) his base salary in effect at the termination date, (ii) his annual bonus compensation paid in fiscal 1999 plus (iii) his award under the Deferred Compensation Plan with respect to fiscal 1999. The acceptance of Shares for payment in the Offer will constitute a Change in Control for purposes of employment agreements. 13 In addition, upon a Change in Control the executives' stock options and interest in Comair's Deferred Incentive Compensation Plan will fully vest. The employment agreements also provide that Comair will provide to the executives (i) a fully paid-up term life insurance policy and disability policy with premiums pre-paid for the remainder of the executives' lives, (ii) family medical insurance coverage and benefits comparable to the insurance coverage provided to Comair's executives for the executives and their spouses for the remainder of their lives (each executive may elect to receive a lump sum in cash equal to the present value of this medical insurance coverage), (iii) lifetime travel privileges for the executives, their spouses and dependent children on all Comair flights and (iv) lifetime access to and the right to travel, upon reasonable notice, on a private aircraft furnished by and at the expense of Comair, provided that if such travel exceeds fifty flight hours in a twelve-month period, such executive shall reimburse Comair for such excess travel. 44. Under the Merger Agreement, Defendant Mueller's stock options entitle him to a payment of $12,542,337 if the buyout is successful. Likewise, Defendant Siebenburgen is entitled to $6,506,483 from his stock options if the buyout is successful. 45. According to the 14-D, Defendant Raymond A. Mueller receives the following compensation if the buyout is successful: The consulting agreement between Raymond A. Mueller ("Mr. R. Mueller") and Comair became effective upon the retirement of Mr. R. Mueller in June 1990 and will terminate upon his death. The consulting agreement, as amended on June 5, 1990, provides for annual payments of $150,000 to Mr. R. Mueller. Upon a "Change of Control" of Comair, Mr. R. Mueller may, at his sole option, elect to terminate the Consulting Agreement, in which event Comair is required to make a lump sum payment equal to the present value of the amounts to be paid over the remaining term of the Consulting Agreement. On August 10, 1999, the Board of Directors authorized an amendment to Mr. Mueller's Consulting Agreement to provide lifetime access to and the right travel, upon reasonable notice, on a private aircraft furnished by and at the expense of Comair, provided that if such travel exceeds fifty flight hours in a twelve- month period, Mr. R. Mueller shall reimburse Comair for such excess travel. During the term of the Consulting Agreement, Mr. R. Mueller is entitled to receive the hospitalization, health and accident and disability insurance made available to Comair's executive officers. The acceptance 14 of Shares for payment in the Offer will constitute a Change in Control for purposes of the Consulting Agreement. 46. The outside directors also received substantial financial inducements to agree with the Tender Offer, including a lump sum payment of $100,000 for each director, and lifetime free air travel on Comair for each outside director and his family. According to the 14-D: In August Comair and each of Peter H. Forster, John A. Haas, Gerald L. Walker [sic], Robert H. Castellini, Christopher J. Murphy, III and Raymond A. Mueller (the "Non-Employee Directors") executed certain agreements in connection with the additional services and responsibilities required by any change in control situation. Upon a "Change in Control" of Comair, each Non-Employee Director is entitled to receive a lump-sum payment equal to such director's earned but unpaid director's fees for the period through and including the date of the Change in Control and an amount equal to five times the annual director's fees. The Non-Employee Directors agreements also provide for lifetime travel privileges for the Non-mployee Directors and their immediate family members on all Comair flights. The basic annual director fee paid to Non-Employee Directors of Comair is $20,000. The acceptance of Shares for payment in the Offer will constitute a Change in Control for purposes of these agreements. 47. In addition, various stock options were granted to the outside directors in 1990, 1992, and 1998. Under the terms of the Merger Agreement if consummated, the outside directors would receive substantial cash payments from the cancellation of those options. According to the 14-D, the outside directors held 455,680 stock options, and they would receive $7,258,982 if the Offer is completed successfully. As such, the required independence of the outside directors has been compromised by the sweetheart deal they have received in the Merger Agreement. WHEREFORE, plaintiff demands judgment as follows: A. Determining that this action is a proper class action under the Kentucky Civil Rules, and that plaintiff is proper class representatives; B. Declaring that defendants have breached their fiduciary duties to plaintiffs and 15 the Class and aided and abetted such breaches; C. Temporarily and permanently enjoining the proposed sale of Comair to Delta and, if the proposed sale is consummated, rescinding it; D. Awarding plaintiff and the Class compensatory and/or rescissory damages as allowed by law; E. Awarding interest, attorney's fees, expert fees and other costs, in an amount to be determined; and F. Granting such other relief as the Court may find just and proper. 16 DATED: October 27, 1999 /s/ Michael G. Brautigam / MGB ------------------------------------------ Michael G. Brautigam / MGB Gene Mesh Michael G. Brautigam (Ky. Bar No. 86789) R. Michael Phebus GENE MESH & ASSOCIATES 2605 Burnet Avenue Cincinnati, Ohio 45219-2502 (513) 221-8800 (513) 221-1097 (fax) /s/ Andre E. Busald / MGB ------------------------------------------ Andre E. Busald / MGB Andre E. Busald (Ky. Bar No. 09850) BUSALD FUNK ZEVELY, PSC 226 Main Street P.O. Box 6910 Florence, Kentucky 41022-6910 (606) 746-5287 (606) 525-1040 (fax) /s/ John Evans / MGB ------------------------------------------ John Evans / MGB John Evans (Ky. Bar No. 81025) David J. Manogue SPECTER SPECTER EVANS & MANOGUE, P.C. Koppers Building, 26th Floor Pittsburgh, PA 15219 (412) 642-2300 (412) 642-2309 (fax) /s/ Richard B. Brualdi / MGB ------------------------------------------ Richard B. Brualdi / MGB Law Offices of Richard B. Brualdi 29 Broadway, Suite 1515 New York, NY 10006 (212) 952-0602 Attorneys for Plaintiffs EX-99.(G)(4) 3 EXHIBIT (g)(4) Richard S. Wayne (0022390) William K. Flynn (0029536) Attorneys for Plaintiff COURT OF COMMON PLEAS HAMILTON COUNTY, OHIO ESTHER DEUTCH, ) c/o Strauss & Troy ) 150 East Fourth Street ) Cincinnati, OH 45202-4018 ) ) Plaintiff, ) ) vs. ) ) DAVID R. MUELLER, RAYMOND R. ) MUELLER, ROBERT H. CASTELLINI, ) Case No. A9906534 CHRISTOPHER J. MURPHY, III, PETER H. ) (Judge _____________) FORSTER, JOHN A, HASS, GERALD R. ) WOLKEN, COMAIR HOLDINGS, INC. ) P.O. Box 75021 ) Cincinnati, OH 45275-0021 ) CLASS ACTION COMPLAINT ) ---------------------- ) and ) (Jury Trial Demanded) ) DELTA AIRLINES ) Hartsfield Atlanta Int'l Airport ) P.O. Box 20706 ) Atlanta, GA 30320 ) ) Defendants. ) Plaintiff, by her attorneys, for her complaint against defendants, alleges upon information and belief, except for paragraph 2 hereof, which is alleged upon knowledge, as follows: 1. Plaintiff brings this action pursuant to Rule 23 of the Ohio Rules of Civil Procedure on her behalf and as a class action on behalf of all persons, other than defendants and those in privity with them, who own the common stock of Comair Holdings, Inc. ("Comair" or the "Company"). 2. Plaintiff has been the owner of the common stock of the Company since prior to the transaction herein complained of and continuously to date. 3. Comair is a corporation duly organized and existing under the laws of the Commonwealth of Kentucky with its headquarters and principal place of business in Cincinnati, Ohio. The Company is a Delta Connection carrier which, through a code-share agreement, flies customers primarily from cities in the Midwest and Florida to Delta's hub in Cincinnati, Ohio and Orlando, Florida. The Company maintains its principal offices at P.O. Box 75021, Cincinnati, Ohio. 4. Defendant Delta Air Lines ("Delta") is the record owner of approximately 21.9% of the Company's outstanding common stock. 5. Defendant David R. Mueller is Chairman of the Board of Directors of the Company and Chief Executive Officer of the Company. 6. Defendant Robert Mueller is a Director of the Company and the father of David Mueller. 7. Defendants Robert H. Castellini, Christopher J. Murphy, III, Peter H. Forster, John A. Hass, and Gerald R. Wolken are Directors of Comair. 8. The Individual Defendants, by reason of their corporate directorships and executive positions, stand in a fiduciary position relative to the Company's 2 public shareholders, whose fiduciary duties, at all times relevant herein, required them to exercise their best judgment, and to act in a prudent manner, and in the best interest of the Company's minority shareholders. Said Defendants owed the public shareholders of Comair the highest duty of good faith, fair dealing, due care, loyalty, and full, candid and adequate disclosure. CLASS ACTION ALLEGATIONS 9. Plaintiff brings this action on her own behalf and as a class action, pursuant to Rule 23 of the Ohio Rules of Civil Procedure, on behalf of all security holders of the Company (except the Defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the Defendants) and their successors in interest, who are or will be threatened with injury arising from defendants' actions as more fully described herein. 10. This action is properly maintainable as a class action. 11. The class is so numerous that joinder of all members is impracticable. As of June 25, 1999, there were approximately 95,567,688 shares of Comair common stock outstanding, of which approximately 78% is owned by holders other than Defendant Delta and/or directors and officers of the Company. 12. There are questions of law and fact which are common to the Class and which predominate over questions affecting any individual Class Member. The common questions include, inter alia, the following: (a) whether Defendants have breached their fiduciary and other common law duties owed by them to Plaintiff and the members of the Class; (b) whether Defendants are pursuing a 3 scheme and course of business designed to eliminate the public securities holders of Comair in violation of the laws of the State of Ohio in order to enrich Delta at the expense and to the detriment of the Plaintiff and the other public stockholders who are members of the class; (c) whether the Individual Defendants have failed to maximize value for the public shareholders of Comair; (d) whether the class is entitled to injunctive relief or damages as a result of the wrongful conduct committed by Defendants; and (e) whether the said proposed acquisition, hereinafter described, constitutes a breach of the duty of fair dealing with respect to the Plaintiff and the other members of the class. 13. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. The claims of the Plaintiff are typical of the claims of other members of the Class and Plaintiff has the same interests as the other members of the Class. Plaintiff will fairly and adequately represent the Class. A class action is superior to any other type of adjudication of this controversy. 14. Defendants have acted in a manner which affects Plaintiff and all members of the Class, thereby making appropriate injunctive relief and/or corresponding declaratory relief with respect to the class as a whole. 15. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class, which would establish incompatible standards of conduct for Defendants, or adjudications with respect to individual members of 4 the Class which would, as a practical matter, be dispositive of the interests of other members or substantially impair or impede their ability to protect their interests. SUBSTANTIVE ALLEGATIONS 16. Comair has operated as a "Delta Connection" carrier since 1984 pursuant to a marketing agreement with Delta, which expires on October 31, 1999 (the "code sharing agreement"). Under the Delta Connection program, all Comair flights are promoted as part of the Delta route network, in computer systems used by travel agents and in advertising and published timetables. 17. In the summer of 1999, representatives of Delta and Comair held a series of discussions about the renewal and renegotiation of the code sharing agreement. Delta indicated that the revenues payable to Comair would be substantially reduced under any revised code sharing agreement. 18. On July 29, 1999, during one of these discussions, representatives of Delta indicated that Delta would be interested in acquiring Comair, rather than entering into a revised code sharing agreement. 19. On August 10, 1999, Comair held a regularly scheduled Board meeting. At this meeting, the Comair Board was advised of status of the negotiations surrounding the code sharing agreement and Delta's interest in the possible acquisition of Comair. That same day, the Company amended the employment agreements of Defendant David A. Mueller and certain other senior officers of the Company. These amendments extended the employment 5 agreements for three years and provided for lucrative cash payments in the event of a change in control of the Company. 20. Additionally, the Company amended the compensation agreements of Defendants Forster, Haas, Walker, Castellini, Murphy and Raymond Mueller, the Company's non-employee directors. These amendments provided that each of the outside Directors will receive a bonus payment of five times the annual director fees in a lump sum cash payment in the event the Company is acquired or merged with another company. The basic annual Director fee paid to the Outside Directors is $20,000 per year so that each of the Outside Directors will receive at least $100,000 when Delta completes its acquisition of Comair. Additionally, Defendant Forster was paid $403,000 by Comair in connection with the evaluation and negotiations of the transaction with Delta. 21. On October 18, 1999 Delta and Comair announced that the two companies had signed a definitive merger agreement whereby Delta will acquire Comair in an all cash transaction valued at $1.8 billion. Under the terms of the agreement, Delta will commence a cash tender off at $23.50 per share for all of the outstanding shares of Comair. Following the completion of the tender offer, those shares not tendered will be converted into the right to receive $23.50 per share in cash. 22. Analysts' reactions to the announcement of the proposed acquisition were not favorable. On October 18, 1999, the Dow Jones News Service reported that: 6 Delta snapped up the smaller airline when its shares were cheap enough to attract other suitors and the prospects of an independent Comair were bright, analysts said. 'They had their own little world there in Cincinnati and could function alone if they had too [sic],' said airline consultant Bob Mann. 23. On or about October 22, 1999, Defendants mailed to Comair's shareholders a Solicitation/Recommendation Statement on 14D-9 (the "14D-9") purportedly describing, inter alia, the merger transaction, the history of the negotiations between the companies, the opinion of Comair's financial advisor and certain other purportedly relevant information. 24. The 14D-9 fails to disclose material information necessary for Comair shareholders to make an informed decision. Comair has previously announced that its passenger traffic for August and September 1999 had increased 18.1% for August and had increased 8.3% for September compared with those months in the previous year. Comair also announced that Revenue Passenger Miles increased 26.9% for August and 16.5% for September and that Available Seat Miles increased 23.1% for August and 23.1% for September as compared with those months in the prior year. However, the most recent financial information for the Company are its operating results for the three months ended June 30, 1999, as set forth in the Tender Offer Statement on Schedule 14D-1 (the "14D-1"). The failure to provide more recent financial information is inexcusable in light of the fact that Delta's financial results for its fiscal quarter ended September 30, 1999, are readily available and are likely to be exceptional strong 7 based on the Company's announcement concerning August and September. Accordingly, Comair shareholders are being asked to make an irrevocable decision regarding their investment in Comair on the basis of incomplete information. 25. By entering into the agreement with Delta, the Comair Board has initiated a process to sell the Company which imposes heightened fiduciary responsibilities and requires enhanced scrutiny by the Court. However, the terms of the proposed transaction were not the result of an auction process or active market check; they were arrived at without a full and thorough investigation by the Individual Defendants; and they are intrinsically unfair and inadequate from the standpoint of the Comair shareholders. 26. The Individual Defendants failed to make an informed decision, as no market check of the Company's value was obtained. In agreeing to the merger, the Individual Defendants failed to properly inform themselves of Comair's highest transactional value. 27. The Individual Defendants have violated the fiduciary duties owed to the public shareholders of Comair. The Individual Defendants' agreement to the terms of the transaction, its timing, and the failure to auction the Company and invite other bidders, and Defendants' failure to provide a market check demonstrate a clear absence of the exercise of due care and of loyalty to Comair's public shareholders. 8 28. The Individual Defendants' fiduciary obligations under these circumstances require them to: (a) Undertake an appropriate evaluation of Comair's net worth as a merger/acquisition candidate; and (b) Engage in a meaningful auction with third parties in an attempt to obtain the best value for Comair's public shareholders. 29. The proposed bid serves no legitimate business purpose of Comair but rather is an attempt by Defendants to unfairly benefit Delta from the transaction at the expense of Comair's public stockholders. The proposed plan will, for a grossly inadequate consideration, deny Plaintiff and the other members of the Class their right to share proportionately in the future success of Comair and its valuable assets, while permitting Delta to reap huge benefits from the transaction. 30. The Individual Defendants have breached their fiduciary duties by reason of the acts and transactions complained of herein, including their decision to merge with Delta without making the requisite effort to obtain the vest offer possible. 31. Plaintiff and other members of the Class have been and will be damaged in that they have not and will not receive their fair proportion of the value of Comair's assets and business, and will be prevented from obtaining fair and adequate consideration for their shares of Comair common stock. 9 32. The consideration to be paid to class members in the proposed merger is unfair and inadequate because, among other things: (a) The intrinsic value of Comair's common stock is materially in excess of the amount offered for those securities in the merger in light of the fact that Comair shares have traded above $23.50 in the past two months and giving due consideration to the anticipated operating results, net asset value, cash flow, and profitability of the Company; (b) The merger price is not the result of an appropriate consideration of the value of Comair because the Comair Board approved the proposed merger in without undertaking steps to accurately ascertain Comair's value through open bidding or at least a "market check mechanism"; and (c) By entering into the agreement with Delta, the Individual Defendants have allowed the price of Comair stock to be capped, thereby depriving Plaintiff and the Class of the opportunity to realize any increase in the value of Comair stock. (d) By reason of the foregoing, each member of the Class will suffer irreparable injury and damages absent injunctive relief by this Court. (e) Defendant Delta knowingly aided and abetted the breaches of fiduciary duty committed by the Individual Defendants in order to permit Delta to acquire Comair at the lowest possible price. The proposed transaction could not take place without Delta's knowing participation. 10 33. Plaintiff and other members of the Class have no adequate remedy at law. WHEREFORE, Plaintiff and members of the Class demand judgment against Defendants as follows: (A) Declaring that this action is properly maintainable as a class action and certifying Plaintiff as the representative of the Class; (B) Preliminarily and permanently enjoining Defendants and their counsel, agents, employees and all persons acting under, in concert with, or for them, from proceeding with, consummating, or closing the proposed transaction; (C) In the event that the proposed transaction is consummated, rescinding it and setting it aside, or awarding rescissory damages to the class; (D) Awarding compensatory damages against Defendants, individually and severally, in an amount to be determined at trial, together with pre-judgment and post-judgment interest at the maximum rate allowable by law, arising from the proposed transaction; (E) Awarding Plaintiff her costs and disbursements and reasonable allowances for fees of Plaintiff's counsel and experts and reimbursement of expenses; and 11 (F) Granting Plaintiff and the class such other and further relief as the Court may deem just and proper. Dated: October 28, 1999 Respectfully submitted, STRAUSS & TROY By: /s/ Richard S. Wayne --------------------------------- Richard S. Wayne (0022390) William K. Flynn (0029536) The Federal Reserve Building 150 East Fourth Street Cincinnati, OH 45202-4018 (513) 621-2120 BERNSTEIN LIEBHARD & LIFSHITZ, LLP Stanley D. Bernstein 10 East 40th Street New York, NY 10016 (212) 779-1414 12 EX-99.(G)(5) 4 EXHIBIT (g)(5) No. 99 CI 06214 JEFFERSON CIRCUIT COURT DIVISION 13 RUSSELL BARKLEY, On Behalf of Himself and All Others Similarly Situated: PLAINTIFF vs. OPINION AND ORDER COMAIR HOLDINGS, INC., et al. DEFENDANTS * * * * * * * * * * * * * * * * * This matter came before the Court on a motion for a Temporary Restraining Order brought by the Plaintiff, Russell Barkley, on behalf of himself and all others similarly situated, to prohibit the Defendant Comair Holdings, Inc. ("Comair") and its Board of Directors from consummating a Tender Offer and Merger with Delta Air Lines, Inc. ("Delta"). The Court being sufficiently advised, after reviewing the Plaintiff's motion and having heard oral arguments from the parties' respective counsel (See Trial Tape: Ragozine v. Greg, 30-13-99 VCR 075-A-2: 1 p.m. - 2:25 p.m.), will deny the motion on the following grounds: (1) the allegations are insufficient to conclude that the Plaintiff or the putative class-member shareholders will suffer irreparable harm; and (2) the Defendants will likely be prejudiced and harmed if the requested Temporary Restraining Order is issued. This matter is therefore set down on the Court's docket for further proceedings and motions on December 1, 1999, at 9:00 a.m. OPINION The Plaintiff maintains that he and the other shareholders of Comair will suffer immediate and irreparable injury if the Tender Offer and Merger is allowed to proceed. The thrust of his argument to restrain Comair is the $50 million dollar "termination fee," the "no shop" provision in the Merger Agreement, conflict of interests between financial advisors, and a breach of the Board of Directors' fiduciary duties. While all of these allegations may have merit, Comair shareholders may recover damages in court if they can prove to the trier of facts that the Board of Directors did indeed breach its duties to the shareholders. Unfortunately for the shareholders, their allegations do not reach the standard that would require this Court to restrain a "multi-billion" dollar transaction and risk the obvious harm that could result to shareholders who support this transaction. The Court has examined the standard espoused by Kentucky's leading case, Maupin v. Stansbury, Ky. App., 575 S.W.2d 695 (1978), and finds that the factors claimed by the Plaintiff have not been met in this action. There is no clear showing "that immediate and irreparable injury to a concrete personal right will occur," nor do the equities appear to require a "status quo," and while the complaint does raise a serious question on the merits, the Plaintiff has an adequate remedy at law. Certainly, the far reaching effects of the "extraordinary relief" requested by the Plaintiff could have an adverse effect on the very concept that the Plaintiff wishes to prevent (i.e., the dissipation of the corporate assets of Comair). This Court is concerned with the immediacy of the timing of the Tender Offer and Merger and the allegations regarding the "no shop" provision. Apparently, however, the 2 period of twenty work days is within the guidelines of the federal regulations, and appropriate notice has been given to the shareholders. Furthermore, while there is a "no shop" provision, it is apparent that other offers could be made to Comair if a suitable purchaser can be found. Therefore, the Court enters the following Order: ORDER IT IS HEREBY ORDERED AND ADJUDGED that the motion for a Temporary Restraining Order brought by Plaintiff, Russell Barkley, on behalf of himself and all others similarly situated, is DENIED. DATED this ____ day of October, 1999. /s/ Geoffrey Morris -------------------------------- GEOFFREY MORRIS, CHIEF JUDGE Jefferson Circuit Court 3 -----END PRIVACY-ENHANCED MESSAGE-----