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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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FUNCO, INC.
(Name of Subject Company)
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FUNCO, INC.
(Name of Person Filing Statement)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
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360762108
(CUSIP Number of Class of Securities)
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DAVID R. POMIJE
10120 WEST 76TH STREET
EDEN PRAIRIE, MINNESOTA 55344
(952) 946-8883
(Name, Address and Telephone Number of Person Authorized to
Receive Notice and Communications on Behalf of the Person Filing Statement)
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COPIES TO:
PHILIP S. GARON, ESQ.
FAEGRE & BENSON LLP
2200 NORWEST CENTER
90 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
(612) 336-3000
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[X] CHECK THE BOX IF THE FILING RELATES TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT DATE OF A TENDER OFFER.
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[Funco, Inc. Letterhead]
FOR IMMEDIATE RELEASE
CONTACT:
Stanley A. Bodine
President
Funco, Inc.
612-946-8883
FUNCO RECEIVES PURPORTED SHAREHOLDER CLASS ACTION LAWSUIT
MINNEAPOLIS, MN, May 2, 2000 - Funco, Inc. (Nasdaq: FNCO) today announced that
David Van Essen, a shareholder of Funco, has commenced a purported shareholder
class action lawsuit against Funco and the members of the Board of Directors of
Funco. The lawsuit alleges that the defendants have breached their fiduciary
duties by taking actions in connection with Funco's merger agreement with
Electronics Boutique (the "EB Merger Agreement") that are designed to halt any
other offers and to deter higher offers from other potential acquirors. The
plaintiff seeks, among other things, to enjoin Funco from honoring the
termination fee provisions of the EB Merger Agreement, to enjoin a merger with
Electronics Boutique, to require the directors to negotiate in good faith with
Babbage's, a unit of Barnes & Noble, and payment of costs and attorneys' fees
incurred in the lawsuit.
The purported Van Essen shareholder class action lawsuit was filed by the same
attorneys who had previously filed a purported shareholder class action lawsuit
announced on April 13, 2000, on behalf of another plaintiff. On April 25, 2000,
plaintiff's attorneys filed a notice of voluntary dismissal of that lawsuit.
Prior to that notice, Funco and Electronics Boutique had amended the EB Merger
Agreement to increase the acquisition price to $21 per share. The notice of
dismissal stated that the relief sought in that lawsuit had become moot because
of Funco's unwillingness to pursue a $17.50 transaction with Electronics
Boutique.
On April 26, Funco announced that it had received a revised proposal for $24.75
per share from Barnes & Noble and on April 27, Funco announced that it had given
Electronics Boutique the five business day notice required by the EB Merger
Agreement and that Funco intended to enter into a merger agreement with Barnes &
Noble at the increased acquisition price at the expiration of that period.
During the five business day period, which expires on May 3, 2000, Electronics
Boutique has the right to propose adjustments to the terms of the EB Merger
Agreement. Despite the $24.75 per share proposal and the April 27 announcement,
the Van Essen lawsuit was commenced.
Stan Bodine, President of Funco, stated: "Given the notice of voluntary
dismissal of the first lawsuit and Funco's overall sale process, we do not
understand the basis for the Van Essen lawsuit." Funco's Board of Directors
denies the plaintiff's allegations and intends to defend the action vigorously.
Funco currently owns and operates 404 video game retail stores, that
are predominantly located in strip malls throughout the United States, and also
operates an e-commerce division, located at http://www.funcoland.com.
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF
AN OFFER TO SELL SHARES OF FUNCO, INC. AT THE TIME THE OFFER IS COMMENCED FUNCO,
INC. WILL FILE WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION A
SOLICITATION/RECOMMENDATION STATEMENT WITH RESPECT TO THE OFFER. THE OFFEROR
WILL FILE A TENDER OFFER STATEMENT WITH THE COMMISSION. THE TENDER OFFER
STATEMENT (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND
OTHER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER. THE OFFER TO PURCHASE, THE RELATED LETTER OF
TRANSMITTAL AND CERTAIN OTHER OFFER DOCUMENTS, AS WELL AS THE
SOLICITATION/RECOMMENDATION STATEMENT, WILL BE MADE AVAILABLE TO ALL
SHAREHOLDERS OF FUNCO, INC. AT NO EXPENSE TO THEM. THE TENDER OFFER STATEMENT
(INCLUDING THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND ALL
OTHER OFFER DOCUMENTS FILED WITH THE COMMISSION) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL ALSO BE AVAILABLE FOR FREE AT THE
COMMISSION'S WEBSITE AT WWW.SEC.GOV.