Tender-Offer Solicitation/Recommendation Statement — Schedule 14D-9
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D9 Moorco International Inc. 23 120K
2: EX-99.1 Form of Change-Of-Control Agreement 36 67K
11: EX-99.10 Complaint in Fmc V. Moorco International Inc. 19 42K
12: EX-99.11 Amended Complaint in Fmc V. Moorco International 7 18K
13: EX-99.12 Complaint in Ballan V. Wellin 11 25K
14: EX-99.13 Complaint in Grossman V. Wellin 16 34K
15: EX-99.15 Opinion of Salomon Brothers Inc 2 13K
3: EX-99.2 Form of Change-Of-Control Agreement 33 63K
4: EX-99.3 1995 Incentive Bonus Plan 7 16K
5: EX-99.4 Supplemental Executive Retirement Plan 18 58K
6: EX-99.5 Benefit Restoration Plan 12 33K
7: EX-99.6 Letter to Moorco Stockholders 1 10K
8: EX-99.7 Press Release 1 8K
9: EX-99.8 Complaint in Moorco International Inc. V. Fmc 12 35K
10: EX-99.9 Order of the Texas Court 2 10K
EX-99.13 — Complaint in Grossman V. Wellin
| EX-99.13 | 1st Page of 16 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
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EXHIBIT 13
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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STANLEY GROSSMAN, :
:
Plaintiff, :
: C.A. No. 14291
-against- :
:
KEITH S. WELLIN, MICHAEL L. TINER, :
JAMES F. ATKINS, GEORGE A. CIOTTI, :
JEFFREY J. COLLINSON, JAMES E. :
DONLAN, CALVIN A. THOMPSON, :
WILLIAM D. WITTER, and MOORCO :
INTERNATIONAL INC., :
:
Defendants. :
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COMPLAINT
Plaintiff, by his attorneys, for his Complaint, alleges upon
information and belief, except as to the allegations contained in paragraph 1,
which plaintiff alleges upon knowledge, as follows:
THE PARTIES
1. Plaintiff Stanley Grossman owns and has owned, at all
times material hereto, 1000 shares of the common stock of Moorco International
Inc. ("Moorco" or the "Company").
2. Defendant Moorco is a Delaware corporation with its
principal place of business located at 2800 Post Oak Blvd., Houston, Texas
77056. Moorco is a leading supplier of fluid
measurement and pressure control products for the petroleum, industrial
process, and electric power generation industries. Moorco's stock is listed
and actively traded on the New York Stock Exchange.
3. Defendant Keith S. Wellin is the Chairman of Moorco's
Board of Directors. As of August 12, 1994, Wellin owned or controlled
approximately 5.1% of Moorco common stock.
4. Defendant Michael L. Tiner ("Tiner") is President,
Chief Executive Officer, and a director of the Company. For the fiscal year
ended May 31, 1994, Tiner received total compensation from Moorco in the amount
of $380,560.
5. Defendant William D. Witter is a director of the
Company. As of August 12, 1994, Witter owned or controlled approximately 7.4%
of Moorco common stock.
6. Defendants James F. Atkins, George A. Ciotti, Jeffrey
J. Collinson, James E. Donlan and Calvin A. Thompson are directors of Moorco.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action pursuant to Rule 23 of
the Rules of this Court, for declaratory, injunctive and other relief on his
own behalf and as a class action, on behalf of all common stockholders of
Moorco (except defendants herein
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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 being deprived of the opportunity to maximize the value of their Moorco
shares by the wrongful acts of defendants complained of herein.
8. This action is properly maintainable as a class
action for the following reasons:
9. The class of stockholders for whose benefit this
action is brought is so numerous that joinder of all Class members is
impracticable. There are more than approximately 9 million share of Moorco
common stock held by approximately 139 shareholders of record who are members
of the Class. The holders of these shares are geographically dispersed
throughout the United States. Moorco stock is listed and actively traded on
the New York Stock Exchange.
10. There are questions of law and fact which are common
to the members of the Class including, inter alia, the following:
a. whether defendants, in bad faith and for improper
motives, have prevented members of the Class from receiving the
maximum value achievable for their shares of Moorco common stock;
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b. whether defendants have failed to consider, in good
faith, the adequacy of unsolicited offers for the Company;
c. whether defendants have engaged in conduct
constituting unfair dealing to the detriment of the public
stockholders of Moorco; and
d. whether defendants have breached their fiduciary and
common law duties owed by them to plaintiff and the other members of
the Class, including their duties of care and loyalty.
11. The claims of plaintiff are typical of the claims of
the other members of the Class, and plaintiff has no interests that are adverse
or antagonistic to the interests of the Class.
12. Plaintiff is committed to the vigorous prosecution of
this action and has retained competent counsel experienced in litigation of
this nature. Accordingly, plaintiff is an adequate representative of the Class
and will fairly and adequately protect the interests of the Class.
13. 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
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the Class, which would establish incompatible standards of conduct for the party
opposing the Class.
14. Defendants have acted and are about to act on grounds
generally applicable to the Class, thereby rendering final injunctive or
corresponding declaratory relief appropriate with respect to the Class as a
whole.
SUBSTANTIVE ALLEGATIONS
15. In recent years, Moorco has struggled with declining
earnings and revenues. For example, the Company reported sales for its
third-quarter ended February 28, 1995, of $45,093,000 compared to $50,032,000
in the third quarter of the prior year. Net income was reported at $1,636,000,
and earnings per share were $0.15, down from the $2,948,000 and $0.25 per share
earned in the prior year. In addition, the Company's sales for the nine-months
ended February 28, 1995 were $134,795,000 compared to the $149,035,000 attained
in the first nine months of the prior year; and net income was $4,698,000 and
earnings per share were $0.40, down from the $8,740,000 and $0.73 per share
earned in the same nine-month period during the prior year. As a result of
Moorco's declining earnings and the resulting decline in the market price of
its stock, Moorco has become a takeover candidate.
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16. In response to marketplace rumors of a possible
unsolicited acquisition and to entrench themselves in their executive and
directorial positions, Moorco's Board of Directors (the "Board") adopted a
shareholder rights plan, or "Poison Pill," on or about November 9, 1994. The
Poison Pill entails a distribution of one right for each outstanding share of
Moorco common stock. Each right entitles the holder to buy one one-hundredth
(1/100th) of a share of a new series of junior participating preferred stock at
an exercise price of $65 per share. Each one one-hundredth of a share of
junior participating preferred stock is essentially the economic equivalent of
one share of Moorco common stock. The rights attach to and trade with Moorco
common stock and are not exercisable until a person or group acquires 15% of
Moorco's common stock or commences a tender offer that would result in
ownership of 15% of Moorco's common stock.
17. Under the Poison Pill, if any person becomes a 15%
stockholder of Moorco, the rights not held by the 15% stockholder "flip in" and
become rights to buy shares of Moorco common stock at a 50% discount. After a
"flip in" event and prior to a person's becoming the beneficial owner of 50% or
more of the Company's common stock, the Board of Directors may, in lieu of
allowing the rights to be exercised, issue one share of common stock in
exchange for all or any pro rata portion of the rights. In the event Moorco is
merged and its common stock
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is exchanged or converted, the new rights, "flip over" and require that
provision be made so as to entitle the holders to buy shares of the acquiring
person's common stock at a 50% discount.
18. In actuality, the Poison Pill's primary purpose is to
enable management to entrench themselves in their lucrative positions with the
Company by preventing a hostile takeover of the Company or by forcing a
potential acquirer to give management hefty "golden parachutes." As a
consequence of implementing the poison pill, the defendants are bound to a
heightened duty to consider whether any acquisition offer is in the best
interest of Moorco's shareholders, and to negotiate in good faith with the
potential acquirer in order to maximize shareholder value.
19. An attractive offer to acquire Moorco and maximize
shareholder value did, in fact, materialize on April 4, 1995, when FMC
Corporation ("FMC"), a leading producer of chemicals and machinery for
industry, government and agriculture, announced that it had offered to buy
Moorco in an all-cash transaction valued at $20.00 a share, or approximately
$223 million (the "FMC Offer"). The FMC Offer represented a 45% premium over
the $13.75 closing price of Moorco's common stock on Friday, March 31, 1995,
and a multiple of 21.5 times Moorco's latest twelve months' net income.
Furthermore, in a
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letter to defendant Tiner, dated April 4, 1995, FMC stated that it will
consider offering a higher price, if Moorco can demonstrate "additional value."
20. The market showed great enthusiasm for the disclosure
on April 4, 1995 of the FMC Offer. The market price of common shares of Moorco
immediately rose $7.75, increasing from $13.75 to $21.375 in the course of
trading on that day.
21. On April 5, 1995, Moorco issued a press release
announcing that its Board of Directors would evaluate the proposal from FMC and
had retained Salomon Brothers Inc. as its financial advisor to assist with the
evaluation. Despite the opportunity represented by the FMC Offer and despite
FMC's willingness to negotiate, the first meeting between FMC and Moorco did
not occur until nearly two weeks later, on April 18, 1995. This meeting was
attended by high level executives from both FMC and Moorco, including defendant
Tiner.
22. At the meeting on April 18, 1995, FMC provided Moorco
with additional information regarding FMC and the FMC Offer and repeated FMC's
willingness to enter into negotiations regarding the FMC Offer. At this
meeting, FMC referred to the common interests of both companies, as evidenced by
FMC's previously visiting a Moorco plant to explore a cooperative relationship
with Moorco. However, Moorco declined to enter into any substantive
negotiations and committed only that it would
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present the additional FMC information to a meeting of the Moorco Board of
Directors, which was yet unscheduled.
23. On May 1, 1995, FMC met again with Moorco. The
meeting was requested by defendant Tiner to report the Moorco Board of
Directors' response to the FMC Offer. Moorco proffered to FMC a proposed
"confidential/standstill agreement," which Moorco demanded FMC execute before
Moorco would consider either engaging in negotiations with FMC or providing FMC
certain confidential information. The standstill agreement contained
unreasonable and overly restrictive provisions which, inter alia, precluded FMC
or others with which FMC might associate from:
a. seeking, offering, proposing or requesting permission
to acquire any asset of Moorco or any security issued by Moorco for
one year;
b. seeking representation on Moorco's board of directors
or soliciting any proxy or consent with respect to any securities of
Moorco for one year;
c. entering into any discussion to do any of the
foregoing for one year;
d. disclosing at any time before or after expiration of
one year to Moorco stockholders any information about Moorco received
by FMC even if disclosure of such
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information would be required to inform Moorco's stockholders fully
regarding a tender offer or other transaction proposed by FMC; and
e. initiating for one year any contact with any officer,
director or employee of Moorco regarding Moorco's operation, assets,
prospects or finances. The standstill agreement also required FMC,
for one year, to inform Moorco promptly of any approach by any third
party concerning FMC's or such third party's participating in any
transaction involving the assets of Moorco or securities issued by
Moorco.
24. The standstill agreement demanded by Moorco as a
pre-condition to negotiations and the production of non-public information is
overbroad, unreasonable, and designed to prevent, rather than encourage, offers
for Moorco. It is particularly unreasonable in light of the protection already
offered by the Poison Pill which, as discussed above, would prevent any
takeover of Moorco not approved by the Company's Board of Directors.
25. On the evening of May 1, 1995 and subsequently, FMC's
representatives communicated FMC's willingness to enter into some form of
confidentiality agreement, including an agreement with a reasonable thirty-day
"standstill" period. In
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response, Moorco claimed that a one-year standstill was "carefully chosen" for
several reasons, including the possibility of a reduction in the capital gains
tax and possible favorable developments in certain litigation. Moorco's
representatives also asserted that Moorco had the right to exclude FMC from
participating in any sale process and thus keep Moorco's shareholders from
being able to accept any FMC proposal because FMC purportedly had obtained
confidential information about Moorco "improperly" during certain visits by FMC
personnel to Moorco plants.
26. Moorco's representatives also threatened that, if
Moorco instituted a "process" leading to the potential sale of Moorco or some
other extraordinary transaction, FMC would be excluded from any such "process"
as an outsider," unless FMC capitulated to the demanded standstill agreement.
27. In subsequent discussions on May 2 and May 3, 1995,
FMC's representatives suggested to Moorco's representatives the possibility of
FMC agreeing to a 45-day standstill and repeated the desire of FMC to negotiate
with Moorco. Moorco's representatives nevertheless repeated the demand for a
one-year standstill period and, although suggesting several modifications to
the proposed agreement, failed to agree that Moorco's stockholders should have
a reasonable opportunity to accept an offer by FMC. Moorco's representatives
reiterated
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the threat to exclude FMC from any process for the sale of Moorco.
28. On May 5, 1995, as a result of Moorco's continued
failure to negotiate with FMC for a sale of the Company, FMC announced that it
had commenced a tender offer for all Moorco Shares at $20 per share in cash.
The tender offer will expire at 12:00 Midnight, on June 2, 1995 and is
conditioned on, among other things, Moorco's redemption of the Poison Pill. As
a result of the tender offer announcement, Moorco's shares rose $7/8 to close
at $22 5/8, on unusually high volume.
22. Commenting on the tender offer, FMC Chairman and CEO
Robert N. Burt stated:
More than a month has passed since we made our original proposal to
Moorco in our letter of April 3 . . . . We have had neither
constructive dialogue nor substantive negotiations since Moorco's
announcement that its board of directors would evaluate the proposal.
Moorco's stockholders should be given the opportunity to decide for
themselves whether to accept our proposal.
22. Mr. Burt also sent a letter to defendant Tiner and
the Moorco Board expressing FMC's disappointment in Moorco's failure to
negotiate in good faith:
We are extremely disappointed to have learned that your board has
responded [to the FMC Offer] with an unreasonable set of conditions
and threats regarding such discussions. Specifically, your
characterization of our cash offer of $20 per share as grossly
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inadequate is inconsistent with traditional and reasonable valuation
measures and not at all justified. Your insistence upon our agreeing
to a one-year standstill is inconsistent with the objective of
delivering to your stockholders a full and fair value in a timely
fashion. Finally your threat of excluding FMC from a process leading
to the sale of the company, should one be initiated by Moorco, is
contrary to the best interests of your stockholders . . . .
In light of all this, we have reluctantly concluded that our
only alternative is to pursue this transaction by going directly to
Moorco's stockholders with our offer . . . .
We would still prefer to have a constructive dialogue and
negotiate an agreement. Although we have commenced a tender offer, we
remain interested in entering negotiations with you to reach an
agreement that could be approved by your board of directors. That
course would truly be in the best interests of your stockholders.
CAUSE OF ACTION AGAINST ALL DEFENDANTS
30. As described above, Moorco's management has shown a
pattern of entrenchment and failure to consider in good-faith FMC's Offer.
Accordingly, there is a substantial likelihood that, in the absence of this
Court's intervention, the defendants will continue this pattern and refuse to
consider in good faith FMC's tender offer and other acquisition offers that may
arise. By virtue of these acts and conduct, the defendants are carrying out a
preconceived plan to prevent the sale of the Company to any party, including
FMC, in violation of their fiduciary duties and to the detriment of Moorco's
public shareholders. As a result, the public stockholders of
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Moorco will be wrongfully deprived of their ability to avail themselves of the
substantial premium included in FMC's tender offer, and other acquisition
offers which may materialize, thereby depriving them of their right to maximize
the value of their shares.
31. The primary objective of defendants' plan to thwart
acquisition offers for the Company is to entrench themselves in managerial and
directorial positions to the detriment of Moorco's shareholders. Indeed, by
their actions, defendants have acted in a manner to prevent the shareholders of
Moorco from availing themselves of offers for their stock which are
substantially higher than its current market price.
32. Defendants have committed further breaches of their
fiduciary duty to the public stockholders of Moorco, by (i) failing to
undertake an adequate evaluation of Moorco's worth as a potential merger or
acquisition candidate; (ii) failing to give adequate consideration to the offer
for Moorco submitted by FMC; (iii) imposing extreme and unreasonable measures
on FMC to prevent the sale of the Company; and/or (iv) failing to act so that
the interests of the public stockholders of Moorco are protected.
33. Unless enjoined by this Court, defendants will
continue to breach fiduciary duties owed to plaintiff and the other members of
the Class, and will not only prevent Moorco's
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shareholders from selling their shares to FMC for a fair and adequate price,
but also will prevent other parties from making premium offers to acquire
Moorco, all to the irreparable harm of the Class.
34. Plaintiff and the other members of the Class have no
adequate remedy at law.
WHEREFORE, plaintiff demands judgment and relief in his favor
and in favor of the Class and against defendants, as follows:
A. Declaring that this action be certified as a proper
class action and certifying plaintiff as Class representative;
B. Declaring that defendants and each of them have
committed a gross abuse of trust and have breached their fiduciary duties to
plaintiff and other members of the Class;
C. Ordering that defendants take appropriate measures to
assure that the FMC tender offer and any other offers for the acquisition of
Moorco or any of its divisions is considered and evaluated by Moorco management
adequately and in good faith in order to maximize shareholder value;
D. Awarding compensatory damages in an amount to be
determined upon the proof submitted to the Court;
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E. Awarding the costs and disbursements of this action;
F. Awarding plaintiff's counsel fees; and
G. Awarding such other and further relief which the
Court may deem just and proper.
DATED: May 8, 1995
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/
-----------------------------
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LITOWITZ BERGER
& GROSSMANN
Vincent R. Cappucci
Henry A. Diamond
1285 Avenue of the Americas
New York, New York 10019
(212) 554-1400
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Dates Referenced Herein and Documents Incorporated by Reference
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