Exhibit (a)(5)(iii)
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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SARAH BUCHINGER,
C.A. No. 18719-NC
Plaintiff,
COMPLAINT
v. ---------
C. ROBERT BUFORD, DERRILL CODY,
PETER A. DEA, JOHN M. FITZGIBBONS,
WILLIAM W. GRANT, 111, HENNIE L.J.M.
GIESKES, PHILIPPE S.E. SCHREIBER and
BARRETT RESOURCES CORPORATION,
Defendants.
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Plaintiff 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 Rules of
the Court of Chancery as a class action on behalf of all persons, other than
defendants and those in privity with them, who own the common stock of Barrett
Resources Corporation ("Barrett" or the "Company").
2. Plaintiff has been the owner of shares of the common stock of the
Company since prior to the wrongs herein complained of and continuously to date.
3. Barrett is a corporation duly organized and existing under the laws
of the State of Delaware. The Company is a Denver based natural gas and oil
exploration and production company. Barrett's resources are focused primarily in
the Rocky Mountain region of Colorado, Wyoming and Utah, the Mid-Continent area
of Kansas, Oklahoma,
New Mexico and Texas and the Gulf of Mexico. The Company maintains its principal
offices at 1515 Arapaho Street, Tower 3, Denver, Colorado 80202.
4. Defendant Peter A. Dea is and was at all relevant times the Vice
Chairman and Chief Executive Officer of Barrett.
5. Defendant C. Robert Buford is the former Chairman and a Director of
Barrett.
6. Defendants Derrill Cody, James M. Fitzgibbons, William W. Grant,
111, Hennie L.J. Gieskes and Philippe S. E. Schreiber are and were at all
relevant times directors of Barrett.
7. The Individual Defendants are in a fiduciary relationship with
plaintiff and the other public stockholders of Barrett and owe them the highest
obligations of good faith, due care, candor and fair dealing.
CLASS ACTION ALLEGATIONS
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8. Plaintiff brings this action as a class action, pursuant to Rule 23
of the Rules of the Court of Chancery, on behalf of all shareholders of the
Company (except defendants 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.
9. This action is properly maintainable as a class action.
10. The class is so numerous that joinder of all members is
impracticable. There are approximately 33 million shares of Barrett common stock
outstanding owned by hundreds, if not thousands, of holders located throughout
the country.
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11. 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 unlawfully impeding a
takeover attempt and improperly seeking to entrench themselves in their
corporate positions at the expense of the public shareholders of Barrett; and
(c) whether the class is entitled to injunctive relief as a result of the
wrongful conduct committed by defendants.
12. Plaintiff is committed to prosecuting this action and 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 will fairly
and adequately represent the class.
13. Defendants have acted in a manner which affects plaintiff and all
members of the class alike, thereby making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the class as a whole.
14. 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 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.
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SUBSTANTIVE ALLEGATIONS
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Factual Background
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15. On March 7, 2001, Shell Oil Company ("Shell"), a wholly owned
subsidiary of Royal Dutch/Shell Group, announced that it had offered to purchase
all of the outstanding shares of Barrett common stock for $55 per share in cash.
The proposed transaction was valued at approximately $1.8 billion, plus the
assumption of $400 million in Barrett debt. In response to this announcement,
the price of Barrett common stock soared over 34% to $61.11 per share, from its
March 6, 2001 closing price of $45.62.
16. Defendants, however, refused to fulfill their fiduciary duties to
Barrett's public shareholders and immediately begin good faith negotiations with
Shell. Instead, defendants have refused to negotiate with Shell and have adopted
a course of delay.
17. As reported March 7, 2001, Shell's Chairman, Walter van de Vijver,
attempted to contact defendant Dea on February 23, 2001 by telephone. Dea
responded three days later
saying he wasn't interested in selling the company or in setting up a
meeting with the chief executive.
On March 1, after again failing to set up a meeting with Dea, van de Vijver
sent a letter to Dea proposing a two step transaction in which Shell would
make a tender offer for all of the outstanding shares of Barrett for $55 a
share in cash, followed by a second step merger at the same price.
Van de Vijver also told Dea that if Barrett was unwilling to engage in
substantive negotiations, then Shell intended to commence the cash tender
offer within the next several days. Van de Vijver requested a response no
later than the close of business March 5.
On March 5, Dea sent van de Vijver a letter declining again to engage in
merger negotiations but asking for more time to respond.
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18. On March 7,2001, Shell announced its proposal to acquire Barrett
and published van de Vijver's letter to Dea requesting that Barrett enter merger
negotiations with Shell immediately. Additionally, Shell commenced a lawsuit
challenging the validity of certain Barrett bylaws that allegedly "contain a
number of invalid provisions designed specifically to thwart the exercise of the
stockholders' statutory right to act by written consent."
Barreft's Bylaws And Anti-Takeover Defenses
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19. Barrett has adopted a number of defensive measures which serve to
discourage unsolicited takeovers and to entrench management in their positions
with the Company. These defensive measures include invalid provisions in
Barrett's bylaws (the "Barrett Bylaws") designed to thwart the exercise of
Barrett stockholders' statutory right to act by written consent and a
shareholder's rights plan (the "Rights Plan"), commonly referred to as a poison
pill.
20. Section 3 of Article III of the Barrett Bylaws (the "Advance
Notice Bylaw") provides in relevant part:
Nominations by stockholders for directors to be elected by written
consent of stockholders shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
secretary of the corporation not less than 60 days nor more than 90
days prior to the first solicitation of any written consents of
stockholders for the election of those nominees. (emphasis supplied).
The Advance Notice Bylaw further provides that "[n]o person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with procedure set forth in this Section."
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21. The Barrett Bylaws also further attempt to restrict the ability of
the stockholders to act by written consent. Article IX, Section 4 of the Barrett
Bylaws provides in part as follows:
These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the board of directors or by the stockholders in the manner
provided in this Article IX, Section 4 at any meeting, but not by
written consent, of the stockholders. In order for the board of
directors to effect an alteration, amendment or repeal of these bylaws
or to adopt new bylaws, written notice containing the proposed
alteration, amendment, repeal, or new bylaws must be provided to all
the directors of the corporation not less than 30 days prior to the
meeting of directors at which the proposal is to be considered unless
the proposal is approved by at least 76 percent of all directors
including 80 percent of Independent Directors (as defined in Article
IV, Section 9 of these bylaws together with other capitalized terms
used in Article IX of these bylaws). In order for the stockholders to
effect an alteration, amendment, or repeal of these bylaws or to adopt
new bylaws, written notice containing the proposed alteration,
amendment, repeal, or new bylaws has been provided to the secretary
and all the directors of the corporation not more than seven days
after the corporation gives notice of the meeting of stockholders at
which the proposal is to be considered. (emphasis added)
22. Thus, Barrett purports to limit the right of the stockholders to
act by written consent through the Company's bylaws, not its certificate of
incorporation. Such a restriction in the Barrett Bylaws is plainly in violation
of Delaware law.
23. Barrett also has a Rights Plan to thwart unsolicited takeover
attempts. The Rights Plan is triggered whenever a person or group acquires 15
percent or more of Barrett's common stock. The Rights Plan provides that holders
of Barrett common stock, other than the "acquiring person", are entitled to
acquire the common stock of the "acquiring person" at half its market price.
24. The Rights Plan has a low "trigger"threshold (i.e., 15%) which
would make a takeover of Barrett prohibitively expensive without the Individual
Defendants'
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approval. Thus, the Individual Defendants have veto power to determine whether
an acquisition proposal, even one highly favorable to class members, can be
effectuated.
25. The Rights Plan permits the Individual Defendants to manipulate
the corporate machinery of Barrett, thereby impairing the corporate democratic
process within the Company at the expense and to the detriment of the Company's
common stockholders. The Rights Plan restrains and impairs the ability of
Barrett stockholders to affect corporate policy, and freely structure the
directorial constituency of the Company. The Rights Plan, inter alia, impedes
shareholder ability to accumulate shares and associate together to replace
incumbent management, oppose management initiatives, or otherwise affect
corporate policy through stockholder resolutions. By effectively preventing any
single party from owning and thereby voting greater than 15% of the outstanding
common shares, management clearly has a significant advantage in any proxy
contest which might threaten to eliminate or diminish their control over
Barrett. The Rights Plan thereby serves to perpetuate senior management's
control over the business and operations of the Company and to frustrate
potential bidders for Barrett.
COUNT I
(Declaratory and Injunctive Relief: Advance Notice Bylaw)
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26. Plaintiff repeats and realleges each and every allegation set
forth above as if fully set forth herein.
27. Article III, Section 3 of the Barrett Bylaws purports to restrict
the ability of the stockholders to act by written consent. Article III,
Section 3 requires stockholders wishing to act by written consent to elect
members of the Barrett Board of Directors first
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to nominate the proposed board member or members at least 60 days in advance of
the first solicitation of written consents for the election of those designees.
28. This purported limitation on the ability of the stockholders to
act by written consent in the Barrett Bylaws violates 8 Del. C. ~ 228.
29. Plaintiff has no adequate remedy at law.
COUNT II
(Declaratory and Injunctive Relief:
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Amendment to the Bylaws By Written Consent
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30. Plaintiff repeats and realleges each and every allegation set
forth above as if fully set forth herein.
31. Article IX, Section 4 of the Barrett Bylaws purports to deny the
right of the stockholders of Barrett to act by written consent to amend the
Barrett Bylaws.
32. This purported limitation on the ability of stockholders to act by
written consent in the Barrett Bylaws violates 8 Del. C. (S) 228.
33. Plaintiff has no adequate remedy at law.
COUNT III
(Breach of Fiduciary Duties)
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34. Plaintiff repeats and realleges each of the allegations as set
forth above as if fully set forth herein.
35. The Individual Defendants have refused to negotiate with Shell in
order to protect their own substantial salaries and perquisites, and to entrench
themselves in their positions of authority and control with the Company. Instead
of fulfilling their fiduciary duties to the public shareholders of Barrett by
immediately beginning negotiations
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with Shell to maximize shareholder value, defendants have adopted a course of
delay in order to protect their own interests.
36. Defendants' refusal to negotiate has deprived and will continue to
deprive the Company's public shareholders of the very substantial premium which
Shell is prepared to pay or the enhanced premium which further negotiation could
secure.
37. Moreover, defendants have refused to take those steps necessary to
ensure that the Company's shareholders will receive maximum value for their
shares of Barrett stock. Defendants have refused to seriously consider the
pending Shell offer, and have not announced their intention to conduct an active
auction or to establish an open bidding process in order to maximize shareholder
value.
38. The Individual Defendants are acting to entrench themselves in
their offices and positions and maintain their substantial salaries and
prerequisites, all at the expense and to the detriment of the public
shareholders of Barrett.
39. By virtue of the acts and conduct alleged herein the Individual
Defendants, who control the actions of the Company, have carried out a
preconceived plan and scheme to place their own personal interests ahead of the
interests of the shareholders of Barrett and thereby entrench themselves in
their offices and positions within the Company. The Individual Defendants have
violated their fiduciary duties owed to plaintiff and 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 Company's public shareholders for their own
personal benefit.
40. 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 entrench
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themselves and deprive the Class of the opportunity to maximize the value of
their Barrett holdings either in a transaction with Shell or some other bona
fide offeror, to the irreparable harm of the Class.
41. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. certifying this action as a class action and appointing plaintiff
as class representative;
B. declaring that the Advance Notice Bylaw is invalid and enjoining
the Company or anyone acting on its behalf or in concert with it from enforcing
the Advance Notice Bylaw;
C. declaring that the purported prohibition on the ability of the
stockholders to amend the Barrett Bylaws by written consent is invalid and
enjoining the Company or anyone acting on its behalf or in concert with it from
enforcing such provision;
D. Ordering the Individual Defendants to carry out their fiduciary
duties to plaintiff and the other members of the class by announcing their
intention to:
1) cooperate fully with any person or entity having a bona fide
interest in proposing a transaction which would maximize shareholder value,
including, but not limited to, a buyout or takeover of the Company by Shell;
2) undertake an appropriate evaluation of Barreft's worth as a
merger/acquisition candidate;
3) take all appropriate steps to enhance Barrett's value and
attractiveness as a merger/acquisition candidate; and
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4) take all appropriate steps to effectively expose Barrett to
the marketplace in an effort to create an active auction for Barrett.
E. ordering the Individual Defendants, jointly and severally, to
account to plaintiff and the class for all damages suffered and to be suffered
by them as a result of the wrongs complained of herein;
F. awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for plaintiffs afforneys'and experts'fees; and
G. granting such other and further relief as may be just and proper in
the premises.
ROSENTHAL,MONHAIT, GROSS
& GODDESS, P.A.
By:/s/
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Suite 1401
Mellon Bank Center
919 Market Street
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LIEBHARD & LIFSHITZ, LLP
10 East 40/th/ Street
New York, New York 10016
(212) 779-1414
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