EXHIBIT 99.11
STATE OF WISCONSIN CIRCUIT COURT MILWAUKEE COUNTY
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XXXXXXX XXXXXX
00 Xxxx Xxxxxx
Xxxxx Xxxx, XX 00000;
and
BRICKELL PARTNERS,
A Florida Partnership,
Individually and on Behalf of
Those Persons Similarly Situated, CASE NO: 97CV003823
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Plaintiffs, Other Injunction or
Restraining Order 30704
Declaratory Judgment 30701
v. Unclassified 30703
XXXXXXXX & XXXXX, INC.
A Wisconsin Corporation
000 Xxxx Xxxxxx
Xxxx Xx Xxx, XX 00000;
XXXXXX X. XXXXXXX,
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxxx Xx Xxx, XX 00000;
XXXXXX X. XXXXX,
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxxx Xx Xxx, XX 00000;
XXXXXXX X. XXXXXXXXXX, [STAMP]
00 Xxxxxxxx Xxxxx
Xxxx Xx Xxx, XX 00000;
XXXX X. XXXXX,
The Aerospace Corp.
0000 X. Xx Xxxxxxx Xxxx.
El Segundo, CA 90245;
XXXXXXXX X. XXXXXX, III,
Xxxxx & Xxxxxxx
Firstar Center
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
XXXXX X. XXXXXX,
00000 Xxxxxx Xxxxx Xxxx
Xxxxx Xxxx Xxxxx, XX 00000;
XXX X. XXXXXX,
Dresser Industries, Inc.
0000 Xxxx Xxxxxx, Box 718
Dallas, TX 75221;
XXXX X. XXXXXX,
000 X. Xxxxxx Xxxxx
Xxxxxx, XX 00000
XXXX X. XXXXXX, XX.,
0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Defendants.
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CLASS ACTION COMPLAINT
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Plaintiffs, by their attorneys, allege upon personal knowledge as to
their own acts and upon information and belief as to all other matters, as
follows:
NATURE OF THE ACTION
1. This is a stockholders' class action lawsuit brought on behalf of
the public stockholders of Xxxxxxxx and Xxxxx, Inc. ("Xxxxxxxx" or the
"Company") who have been, and continue to be, deprived of the opportunity to
realize fully the benefits of their investment in the Company. The individual
defendants have wrongfully refused to properly consider a BONA FIDE offer for
the Company from Harnischfeger Industries, Inc. ("Harnischfeger"), announced
on April 25, 1997, which presents an excellent opportunity to keep the
Xxxxxxxx & Xxxxx jobs in Wisconsin. Their actions constitute unfair dealing
and a breach of fiduciary duty to maximize shareholder value. The individual
defendants are using their fiduciary positions of control over Xxxxxxxx to
thwart others in their legitimate attempts to acquire the Company, and the
individual defendants are trying to entrench themselves in their positions
with Xxxxxxxx.
PARTIES
2. Plaintiffs are and, at all relevant times, have been the owner of
shares of Xxxxxxxx common stock.
3. Xxxxxxxx is a corporation duly organized and existing under the
laws of the State of Wisconsin. The Company maintains its principal place of
business at 000 Xxxx Xxxxxx, Xxxx Xx Xxx, Xxxxxxxxx 00000. Xxxxxxxx designs
and produces large, high-precision industrial automation systems, including
automated machine tools, smart manufacturing systems, and related products.
As of September 29, 1996, Xxxxxxxx had approximately 33.12 million shares of
common stock outstanding and approximately 2,352 stockholders of record.
Xxxxxxxx' stock trades on the NASDAQ National Market System.
4. Defendant Xxxxxx X. Xxxxxxx ("Xxxxxxx"), prior to March 1997, was
the Chief Executive Officer of Xxxxxxxx. Xxxxxxx, prior to April 30, 1997,
was also the Chairman of the Board of Directors and since that time Xxxxxxx
has been Vice Chairman of the Company. At all relevant times, Xxxxxxx has
been a member of Xxxxxxxx' board of directors.
5. Defendant Xxxxxx X. Xxxxx ("Isles") has been, at all relevant
times, President and, since March of 1997, Chief Executive Officer of
Xxxxxxxx. Xxxxx has also served as the Chairman of the Board of Directors
since April 30, 1997.
6. Defendant Xxxxxxx X. Xxxxxxxxxx ("Xxxxxxxxxx") has been, at all
relevant times, Vice President, Secretary and a director of Xxxxxxxx.
7. Defendants Xxxx X. Xxxxx, Xxxxxxxx X. Xxxxxx, III, Xxxxx X. Xxxxxx,
Xxx X. Xxxxxx, Xxxx X. Xxxxxx, and Xxxx X. Xxxxxx, Xx., have been, at all
times material hereto, directors of Xxxxxxxx.
8. The individuals identified in paragraphs 4 through 7 are
collectively referred to throughout this complaint as the "Individual
Defendants."
9. The Individual Defendants, by reason of their corporate
directorship and/or executive positions, stand in a fiduciary position
relative to the Company's shareholders, which fiduciary relationship, at all
times relevant herein, required the defendants to exercise their best
judgment, and to act in a prudent manner and in the best interests of the
Company's shareholders.
CLASS ACTION ALLEGATIONS
10. Plaintiffs bring this case on their own behalf and as a class
action, pursuant to Wis. Stat. Section 803.08, on behalf of all
stockholders of the Company, except defendants herein and any person, firm,
trust, corporation, or other entity related to or affiliated with any of the
defendants, who will be threatened with injury arising from defendants'
actions as is described more fully below (the "Class").
11. This action is properly maintainable as a class action.
12. The class is so numerous that joinder of all members is
impracticable. The Company has thousands of stockholders who are scattered
throughout the United States.
13. There are questions of law and fact common to the Class including,
INTER ALIA, whether:
a. defendants have breached their fiduciary duties owed by them to
plaintiffs and other members of the Class by failing and refusing to attempt
in good faith to maximize shareholder value in the sale of Xxxxxxxx;
b. defendants have breached or aided and abetted the breach of the
fiduciary duties owed by them to plaintiffs and other members of the Class;
c. defendants, through use of a Poison Pill, engaged in a plan and
scheme to thwart and reject BONA FIDE offers and proposals from third
parties, including Harnischfeger; and
d. plaintiffs and the other members of the Class are being and
will continue to be injured by the wrongful conduct alleged herein and, if
so, what is the proper remedy and/or measure of damages.
14. Plaintiffs are committed to prosecuting the action and have
retained competent counsel experienced in litigation of this nature.
Plaintiffs' claims are typical of the claims of the other members of the
Class and plaintiffs have the same interests as the other members of the
Class. Plaintiffs are adequate representatives of the Class.
15. The prosecution of separate actions by individual members of the
Class would create the 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 the Class which would as a practical matter be
dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect
their interests.
16. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary
and final injunctive relief on behalf of the Class as a whole is appropriate.
SUBSTANTIVE ALLEGATIONS
17. On April 25, 1997, after a failed attempt to negotiate a
transaction directly with Xxxxxxxx' management, Harnischfeger announced that
it would immediately commence an all-cash tender offer for all outstanding
shares of Xxxxxxxx (the "Tender Offer").
18. The Tender Offer was priced at $19.00 for each outstanding share of
Xxxxxxxx stock. The terms of Tender Offer also provided that Harnischfeger
would assume $116 million of Xxxxxxxx debt. The Tender Offer has a total
transaction value of approximately $747 million and was not subject to any
financing contingencies.
19. The $19.00 per share offering price is approximately 40% over the
Company's unaffected stock price of $13.65 per share on the day prior to the
announcement of the Tender Offer. The premium offered by the Harnischfeger
Tender Offer is even more attractive in light of the fact that the Company's
earnings over the 1996 fiscal year have steadily eroded and the fact that
Xxxxxxxx took a $64.1 million charge relating to equipment problems at two of
its largest customer's plants.
20. As Xxxxxxxxxxxxx'x Tender Offer was premised upon publicly
available information, Xxxxxxxxxxxxx stated that they would like to continue
to negotiate with the Xxxxxxxx' board to formulate a mutually agreeable
transaction and invited the Xxxxxxxx Board to immediately commence
negotiations of a definitive agreement containing mutually agreed upon terms
and conditions.
21. Xxxxxxxx instead responded to the Tender Offer by urging
shareholders not to tender any shares and arguing that the true value of
Xxxxxxxx stock was
not accurately reflected in the marketplace. Xxxxxxxx has taken no measures
to seriously consider, evaluate or study the Tender Offer.
22. In 1995, Xxxxxxxx established a preferred stock purchase rights plan
(the "Poison Pill") which made it prohibitively expensive for a company to
acquire Xxxxxxxx without the blessing of the present management. Under the
Plan, shareholders have the right to purchase one preferred stock purchase
right for each common share held if one person or group acquires more than
20% of the Company stock. In a transaction involving a merger or business
combination, the holder of the preferred stock purchase right would be
entitled to buy a number of the acquiring company's common shares having a
market value of twice the exercise price of each purchase right. As further
evidence of the Individual Defendants' intransigence, Xxxxxxxx has provided
no assurance that the Poison Pill would be waived even if the public property
tendered their shares to Harnischfeger.
23. Xxxxxxxx represents a highly attractive acquisition candidate.
Defendants' conduct would ensure their continued positions within the Company
but deprive the Company's public shareholders of the premium that
Harnischfeger is prepared to pay, or of the enhanced premium that further
negotiation or exposure of Xxxxxxxx to the market could provide.
24. The continual rebuff of Harnischfeger's offers to negotiate and the
wrongful use of the Poison Pill has the force and effect of entrenching the
Individual Defendants in their corporate offices against any real or
perceived threat to their control, and dramatically impairs the rights of
Class members to exercise freedom of choice in a proxy contest or to avail
themselves of a BONA FIDE offer to purchase their shares by an acquiror, such
as Harnischfeger, unfavored by incumbent management.
25. This fundamental shift of control of the Company's destiny from the
hands of its shareholders to the hands of the Individual Defendants results
in a heightened fiduciary duty of the Individual Defendants to consider, in
good faith, a third party bid, such as Xxxxxxxxxxxxx, and further requires
the Individual Defendants to pursue a third party's interest in acquiring the
Company and to negotiate in good faith with a bidder on behalf of the
Company's shareholders.
26. The purpose, intent and effect of the Poison Pill, in the face of a
pending offer for the Company, is to thwart, deter, impede, and delay the
acquisition of Xxxxxxxx by Xxxxxxxxxxxxx or any other suitor.
27. Defendants' recalcitrance to consider and promptly act upon
Xxxxxxxxxxxxx'x Tender Offer has no valid business purpose, and simply
evidences their disregard for the premium being offered to Xxxxxxxx'
shareholders. By failing to meet and negotiate or offer to meet and negotiate
with Xxxxxxxxxxxxx, defendants are depriving plaintiffs and the Class of the
right to share in the assets and businesses of Xxxxxxxx and receive the
maximum value for their shares.
28. Defendants owe fundamental fiduciary obligations to Xxxxxxxx'x
stockholders to take all necessary and appropriate steps to maximize the
value of their shares. In addition, the Individual Defendants have the
responsibility to act independently so that the interests of the Company's
public stockholders will be protected, to seriously consider all BONA FIDE
offers for the Company, and to conduct fair and active bidding procedures or
other mechanisms for checking the market to assure that the highest possible
price is achieved. Further, the directors of Xxxxxxxx must adequately ensure
that no conflict of interest exists between the Individual Defendants' own
interests and their fiduciary
obligations to maximize stockholder value or, if such conflicts exist, to
insure that all such conflicts will be resolved in the best interests of the
Company's stockholders.
29. Because defendants dominate and control the business and corporate
affairs of Xxxxxxxx and because they are in possession of private corporate
information concerning Xxxxxxxx'x assets, businesses and future prospects,
there exists an imbalance and disparity of knowledge of economic power
between defendants and the public stockholders of Xxxxxxxx. This discrepancy
makes it grossly and inherently unfair for defendants to entrench themselves
at the expense of its public stockholders.
30. The Individual Defendants have breached their fiduciary and other
common law duties owed to plaintiffs and other members of the Class in that
they have not and are not exercising independent business judgment and have
acted and are acting to the detriment of the Class.
31. In connection with the conduct described herein, the Individual
Defendants breached their fiduciary duties by, among other things:
a. failing to properly the Harnischfeger Tender Offer without
fully informing themselves about or intentionally ignoring the
future prospects of a combined Xxxxxxxx/Xxxxxxxxxxxxx company,
or the intrinsic worth of Harnischfeger, and
b. failing and refusing to meet with representatives of
Harnischfeger.
32. Defendants have refused to take those steps necessary to ensure
that Xxxxxxxx'x stockholders will receive maximum value for their shares of
Xxxxxxxx stock. Defendants have thus refused to seriously consider the
pending offer, and have failed to
announce any active auction or open bidding procedures best calculated to
maximize shareholder value in selling the Company.
33. The Individual Defendants are acting to entrench themselves in
their offices and positions and maintain their substantial salaries and
perquisites, all at the expense and to the detriment of the public
stockholders of Xxxxxxxx.
34. By the acts, transactions and courses of conduct alleged herein,
the Individual Defendants, individually and as part of a common plan and
scheme in breach of their fiduciary duties and obligations, are attempting
unfairly to deprive plaintiffs and other members of the Class of the premium
they could realize in an acquisition transaction and to ensure continuance
of their positions as directors and officers, all to the detriment of
Xxxxxxxx'x public stockholders. The Individual Defendants have been engaged
in a wrongful effort to entrench themselves in their offices and positions of
control and prevent the acquisition of Xxxxxxxx except on terms that would
further their own personal interests.
35. As a result of the actions of the Individual Defendants, plaintiffs
and the 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
Xxxxxxxx'x assets and businesses and/or have been and will be prevented from
obtaining a fair and adequate price for their shares of Xxxxxxxx'x common
stock.
36. Plaintiffs seek preliminary and permanent injunctive relief and
declaratory relief preventing defendants from inequitably and unlawfully
depriving plaintiffs and the Class of their rights to realize a full and fair
value for their stock at a premium over the market price, by unlawfully
entrenching themselves in their positions of control, and to compel
defendants to carry out their fiduciary duties to maximize shareholder value.
37. Only through the exercise of this Court's equitable powers can
plaintiffs be fully protected from the immediate and irreparable injury which
defendants' actions threaten to inflict. Defendants are precluding the
stockholders' enjoyment of the full economic value of their investment by
failing to proceed expeditiously and in good faith to evaluate and pursue a
premium acquisition proposal that would provide consideration for all shares
at an attractive price.
38. Unless enjoined by the Court, defendants will continue to breach
their fiduciary duties owed to plaintiffs and the members of the Class,
and/or aid and abet and participate in such breaches of duty, and will
prevent the sale of Xxxxxxxx at a substantial premium, all to the irreparable
harm of plaintiffs and other members of the Class.
39. Plaintiffs and the Class have no adequate remedy at law
WHEREFORE, plaintiffs demand judgment as follows:
(a) Declaring this to be a proper class action and certifying
plaintiffs as class representatives;
(b) Ordering the Individual Defendants to carry out their
fiduciary duties to plaintiffs and the other members of the Class by
announcing their intention to:
(i) cooperate fully with any entity or person, including
Harnischfeger, having a BONA FIDE interest in proposing any transactions that
would maximize shareholder value, including but not limited to, a merger or
acquisition of Xxxxxxxx;
(ii) immediately undertake an appropriate evaluation of
Xxxxxxxx'x worth as a merger/acquisition candidate;
(iii) take all appropriate steps to enhance Xxxxxxxx'x value
and attractiveness as a merger/acquisition candidate;
(iv) take all appropriate steps to effectively expose
Xxxxxxxx to the marketplace in an effort to create an active auction of the
Company;
(v) act independently so that the interests of the
Company's public stockholders will be protected; and
(vi) adequately ensure that no conflicts of interest exist
between the Individual Defendants' own interest and their fiduciary
obligation to maximize shareholder value or, in the event such conflicts
exist, to ensure that all conflicts of interest are resolved in the best
interests of the public stockholders of Xxxxxxxx;
(c) Ordering the Individual Defendants, jointly and severally to
account to plaintiffs and the Class for all damages suffered and to be
suffered by them as a result of the acts and transactions alleged herein;
(d) Awarding plaintiffs the costs and disbursements of this
action, including a reasonable allowance for plaintiffs' attorneys' and
expert' fees; and
(e) Granting such other and further relief as may be just and
proper.
Dated: May 6, 1997
Xxxxx XxXxxx, S.C.
By: /s/ Xxxxx XxXxxx
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Xxxxx XxXxxx
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
(000) 000-0000
Wis. Atty No. 1010779
Attorneys for Plaintiff
OF COUNSEL:
WECHSLER XXXXXXX
XXXXXXXX & XXXXXX LLP
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
XXXXXX, BRONZAFT,
XXXXXXXX & XXXXXX LLP
Xxxxx Xxxxxx, Esq.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
