IN THE COURT CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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CRANDON CAPITAL PARTNERS, ) CIVIL ACTION NO. 14538
a Florida Partnership, )
Individually and On Behalf of )
All Others Similarly Situated, )
)
Plaintiff, )
)
)
- against - )
) CLASS ACTION
) COMPLAINT
ROBERT G. BOWMAN, FRANK A. )
ROSENBERRY, JAMES M. HARRISON, )
WILLARD J. OVERLOCK,JOANNA )
BRADSHAW, RICHARD E. CHENEY, )
RUDOLPH EBERSTADT, JR., ROBERT )
GARRETT, BARBARA M. HENEGAN, )
JOHN G. RUSSELL, ROBERT J. SIMON, )
AND C. R. GIBSON CO., )
)
Defendants. )
)
)
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Plaintiff, Crandon Capital Partners ("Crandon"), by its
undersigned attorneys, for its complaint against defendants, alleges as
follows:
NATURE OF THE ACTION
1. Plaintiff brings this action individually and as a class
action on behalf of all persons, other than defendants, who own the
securities of C.R. Gibson Co. ("Gibson" or the "Company") and who are
similarly situated, for injunctive relief and damages. Plaintiff seeks,
INTER ALIA, to enjoin the consummation of a proposed transaction (the
"Proposed Transaction") announced by the Company and Thomas Nelson, Inc.
("Nelson") on September 14, 1995,
pursuant to which Freeman will pay $9.00 for each share of Gibson's
common stock in a transaction valued at $67 million. Alternatively,
in the event that the transaction is consummated, plaintiff
seeks to recover damages caused by the breach of fiduciary duties
owed by the director defendants (as defined below). The Proposed
Transaction and the acts of the Gibson director defendants, as more
particularly alleged herein, constitute a breach of the defendants'
fiduciary duties to the plaintiff and the class and a violation of
applicable legal standards governing the defendants herein.
2. The Proposed Transaction is being advanced through unfair
procedures and the consideration offered is an unfair price and does not
constitute a maximization of stockholder value.
3. The director defendants' authorization to pursue the Proposed
Transaction was given in breach of the director defendants' fiduciary
duties owed to Gibson's stockholders to take all necessary steps to ensure
that the stockholders will receive the maximum value realizable for their
shares in any acquisition of the Company. In the context of this action,
the board of directors, having expressed a willingness to consider an offer
to purchase Gibson, must take all reasonable steps to assure the
maximization of stockholder value, including the implementation of a
bidding mechanism to foster a fair auction of the Company to the highest
bidder or the exploration of strategic alternatives which will return
greater or equivalent short-term value to the plaintiff and the class.
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PARTIES
4. Plaintiff has been a continuous owner of shares of Gibson
common stock at all relevant times described herein.
5. Defendant Gibson is a corporation duly organized and existing
under the laws of the State of Delaware, with its principal offices located
at 32 Knight Street, Norwalk, Connecticut. As of July 31, 1995, the
Company had approximately 7.2 million shares of common stock outstanding.
The officers and directors of Gibson hold or control approximately 2.6
million of the outstanding shares. Gibson's principal business is the
printing and publication of record books, photograph albums, inspirational
books, gift wraps, and social stationery.
6. Defendant Robert G. Bowman, at all times material hereto, has
been the Chairman of the Board of Directors of Gibson.
7. Defendant Frank A. Rosenberry, at all times material hereto,
has been the President, Chief Executive Officer, and a director of Gibson.
8. Defendant James M. Harrison, at all times material hereto,
has been the Chief Operating Officer, Executive Vice President, Secretary,
Treasurer, and a director of Gibson.
9. Defendant Willard J. Overlock, at all times material hereto,
has been the Company's legal counsel and a director of Gibson.
10. Defendants Joanna Bradshaw, Richard E. Cheney, Rudolph
Eberstadt, Jr., Robert Garrett, Barbara M. Henegan, John G. Russell, and
Robert J. Simon are directors of Gibson.
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11. The defendants named in paragraphs 6 through 10 above are
hereinafter referred to as the "Individual Defendants".
12. The Individual Defendants, by reason of their corporate
directorship and/or executive positions, are fiduciaries to and for the
Company's shareholders, which fiduciary relationship requires them to
exercise their best judgment, and to act in a prudent manner and in the
best interests of the Company's shareholders.
13. Each defendant herein is sued individually as an aider and
abettor, as well as in his/her capacity as an officer and/or director of
the Company, and the liability of each arises from the fact that he or she
has engaged in all or part of the unlawful acts, plans, schemes, or
transactions complained of herein.
CLASS ACTION ALLEGATIONS
14. Plaintiff brings this action individually on its own behalf
and as a class action, on behalf of all stockholders 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 (the "Class").
15. This action is properly maintainable as a class action.
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16. The Class is so numerous that joinder of all members is
impracticable. There are hundreds of shareholders who hold the
approximately 7.2 million shares of Gibson common stock outstanding. The
disposition of their claims in a class action will be of benefit to the
parties and the Court. The record holders of the Company's securities can
be easily determined from the stock transfer journals maintained by Gibson
or its agents.
17. A class action is superior to other methods for the fair and
efficient adjudication of the claims herein asserted, and no unusual
difficulties are likely to be encountered in the management of this action
as a class action. The likelihood of individual class members prosecuting
separate claims is remote.
18. There is a well-defined community of interest in the
questions of law and fact involved affecting the member of the Class.
Among the questions of law and fact which are common to the Class, which
predominate over questions affecting any individual class member are, INTER
ALIA, the following:
(a) whether the Proposed Transaction is grossly unfair to
the stockholders of Gibson;
(b) whether defendants willfully and wrongfully failed to
maximize shareholder value through an adequate auction or market check
process;
(c) whether defendants have breached or aided and abetted
the breach of the fiduciary and other common law duties owed by them to
plaintiff and the members of the Class; and
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(d) whether plaintiff and the other members of the Class
would be irreparably damaged were the transaction complained of herein
consummated.
19. Plaintiff is a member of the Class and is committed to
prosecuting this action. Plaintiff has retained competent counsel
experienced in litigation of this nature. The claims of 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 does not have
interests antagonistic to or in conflict with those it seeks to represent.
Plaintiff is an adequate representative of the Class.
20. The likelihood of individual class members prosecuting
separate individual actions is remote due to the relatively small loss
suffered by each Class member as compared to the burden and expense of
prosecuting litigation of this nature and magnitude. Absent a class
action, defendants are likely to avoid liability for their wrongdoing, and
Class members are unlikely to obtain redress for their wrongs alleged
herein. There are no difficulties likely to be encountered in the
management of the Class claims. This Court is an appropriate forum for
this dispute.
SUBSTANTIVE ALLEGATIONS
21. By the acts, transactions, and courses of conduct alleged
herein, defendants, individually and as part of a common plan and scheme
and/or aiding and abetting one another in total disregard of their
fiduciary duties, are attempting to deceive the
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plaintiff and the Class and deprive them unfairly of their investment
in Gibson.
22. On September 14, 1995, the DOW JONES NEWS WIRE reported that
Gibson and Nelson had "signed a definitive agreement to acquire all the
outstanding shares of C.R. Gibson," which had been unanimously approved by
Gibson's board of directors.
23. Stockholders of Gibson will receive $9.00 per share in cash
for each share of stock they own. The proposed transaction is valued in
excess of $67 million.
24. The consideration to be paid to the Gibson shareholders in
the merger is grossly unfair, inadequate, and substantially below the fair
or inherent value of the Company. The $9.00 per share offering price is
approximately $0.25 per share more than the unaffected trading price of the
Company just one day prior to the announcement of the Proposed Transaction.
This price represents only a 2.8% premium over the market price of the
Company's stock.
25. The intrinsic value of the equity of Gibson is materially
greater than the merger consideration, taking into account Gibson's asset
value, its expected growth, and the strength of its business. The Company
reported on August 8, 1995 that its sales had improved 7.5% for the six
months ended June 1995 as compared to the same period in 1994. Further,
Gibson reported that its second quarter net income had increased 41%
because of a narrowed loss from discontinued operations. In light of its
increased sales and operating efficiencies, Gibson is appropriately
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valued higher than the total consideration offered under the Proposed
Transaction.
26. The Proposed Transaction price is not the result of arm's
length negotiations but was fixed arbitrarily by defendants and Nelson as
part of the unlawful plan and scheme to obtain the ownership of Gibson at
the lowest possible price. These facts have not been disclosed by
defendants.
27. Additionally, defendants, in violation of their fiduciary
obligations to maximize stockholder value, have not considered other
potential purchasers of Gibson or its stock in a manner designed to obtain
the highest possible price for Gibson public stockholders.
28. The Proposed Transaction is wrongful, unfair, and harmful to
Gibson stockholders, and represents an attempt by defendants to aggrandize
or, at a minimum, maintain their personal and financial positions and
interests and to enrich themselves, at the expense of and to the detriment
of the stockholders of the Company. The Proposed Transaction will deny
class members their right to share proportionately in the true value of
Gibson's valuable assets, profitable business, and future growth in profits
and earnings, while usurping the same for the benefit of the defendants at
an unfair and inadequate price.
29. By reason of all of the foregoing, defendants herein have
willfully participated in unfair dealing toward the plaintiff and the other
members of the Class and have engaged in and
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substantially assisted and aided and abetted each other in breach of the
fiduciary duties owed by them to the Class.
30. Defendants have violated fiduciary and other common law
duties owed to the plaintiff and the 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 in order to benefit
themselves and/or their colleagues.
31. As a result of the action of defendants, plaintiff and the
Class have been and will be damaged in that they have been deceived, are
the victims of unfair dealing, and are not receiving the fair value of
Gibson's assets and businesses.
32. Unless enjoined by this Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the Class, and will
succeed in their plan to enrich themselves by excluding the Class from its
fair proportionate share of Gibson's valuable assets and businesses, all to
the irreparable harm of the Class.
33. The plaintiff and the Class have no adequate remedy of law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
(a) declaring that this lawsuit is properly maintainable as
a class action and certifying the plaintiff as proper representative of the
Class;
(b) declaring that the defendants and each of them have
committed or aided and abetted an abuse of trust and have
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breached their fiduciary duties to the plaintiff and the other members
of the Class;
(c) 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;
(d) in the event the Proposed Transaction is consummated,
rescinding it and setting it aside;
(e) ordering defendants to permit a stockholders' committee
comprised only of class members and their representatives to ensure a fair
procedure, adequate procedural safe-guards, and independent input by
plaintiff and the Class in connection with any transaction for the shares
of Gibson;
(f) awarding damages against defendants, jointly and
severally, in an amount to be determined at trial, together with
prejudgment interest at the maximum rate allowable by law;
(g) awarding plaintiff and the Class their costs and
disbursements and reasonable allowances for plaintiff's counsel and
experts' fees and expenses; and
(h) granting such other and further relief as may be just
and proper.
Dated: September 14, 1995 ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By /S/KEVIN GROSS
Kevin Gross
First Federal Plaza
P.O. Box 1070
Wilmington, Delaware 19899-1070
(302) 656-4433
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OF COUNSEL:
WECHSLER SKIRNICK HARWOOD
HALEBIAN & FEFFER LLP
805 Third Avenue
New York, New York 10022
(212) 935-7400
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