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Exhibit 99.10
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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ROBERT LEWIS, | Civil Action No. 17864
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Plaintiff, |
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v. |
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LAWRENCE TOAL; DERRICK D. CEPHAS; |
RICHARD W. DALRYMPLE; FRED B. KOONS; |
MARGARET OSMER-MCQUADE; HOWARD |
SMITH; FREDERICK C. CHEN; J. BARCLAY |
COLLINS II; JAMES F. FULTON; VIRGINIA |
M. KOPP; JAMES M. LARGE, JR.; JOHN |
MORNING; SALLY HERNANDEZ-PINERO; |
PAUL A. QUALBEN; EUGENE G. SCHULZ, JR.; |
NORMAN R. SMITH; IRA T. WENDER; |
DIME BANCORP, INC. and HUDSON |
UNITED BANCORP, |
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Defendants. |
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COMPLAINT
Plaintiff alleges upon information and belief, except as to paragraph 1
which is alleged upon personal knowledge, as follows:
THE PARTIES
1. Plaintiff is the owner of shares of the common stock of Dime Bancorp,
Inc. ("Dime" or the "Company") and has been the owner of such shares
continuously since prior to the wrongs complained of herein.
2. Dime is a corporation duly existing and organized under the laws of the
State of Delaware. Dime is a holding company for the Dime Savings Bank of New
York, FSB. The Company's business segments are retail banking, commercial
banking, mortgage banking, and
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investment portfolio.
3. Defendant Lawrence J. Toal is and at all times relevant hereto has been
President, Chairman of the Board, Chief Operating Officer and Chief Executive
Officer of Dime.
4. Defendants Derrick D. Cephas, Richard W. Dalrymple, Fred B. Koons,
Margaret Osmer-McQuade, Howard Smith, Ira T. Wender, Frederick C. Chen, J.
Barclay Collins II, James F. Fulton, Virginia M. Kopp, James M. Large, Jr., John
Morning, Sally Hernandez-Pinero, Paul A. Qualben, Eugene G. Schulz, Jr. and
Norman R. Smith are and at all times relevant hereto have been directors of
Dime.
5. The individual defendants are in a fiduciary relationship with
plaintiff and the other public stockholders of Dime, and owe plaintiff and the
other members of the class the highest obligations of good faith, fair dealing,
due care, loyalty and full and candid disclosure.
6. Hudson United Bankcorp ("Hudson") is a holding company for Hudson
United Bank, Lafayette American Bank and Bank of the Hudson.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action on his own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of the
holders of Dime common stock (the "Class"). Excluded from the Class are
defendants herein and any person, firm, trust, corporation or other entity
related to or affiliated with any of the defendants.
8. This action is properly maintainable as a class action because:
(a) The Class is so numerous that joinder of all members is
impracticable. There are approximately 110.9 million shares of Dime common stock
outstanding.
(b) There are questions of law and fact, including the following:
(1) whether the defendants have breached their fiduciary and
other
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common law duties owed by them to plaintiff and the other members of the Class;
and
(2) whether the Class is entitled to injunctive relief as a
result of the wrongful conduct committed by defendants.
(c) Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. Plaintiff's
claims are typical of the claims of the other members of the Class and plaintiff
has the same interests as the other members of the Class. Accordingly, plaintiff
is an adequate representative of the Class and will fairly and adequately
protect the interests of the Class.
(d) Defendants have acted on grounds generally applicable to the
Class with respect to the matters complained of herein, thereby making
appropriate the relief sought herein with respect to the class as a whole.
SUBSTANTIVE ALLEGATIONS
9. On or about September 15, 1999, Dime entered into a merger agreement
with Hudson which was subsequently restated and amended on or about December 27,
1999. Dime will be the surviving entity and will be renamed Dime United Bancorp,
Inc.
10. Under the terms of the merger agreement with Hudson, each Dime
stockholder will receive 0.60255 shares of Dime United stock for each share of
existing Dime stock. Hudson shareholders will receive 1.0 share of Dime United
stock for each share of Hudson common stock held. After the merger, Dime
stockholders will own 56% of Dime United and Hudson stockholders will own 44% of
the combined entity. Dime's shareholder meeting to vote upon the Hudson merger
agreement is set for March 15, 2000. Since the merger announcement in September
of 1999, Hudson's shares have declined in value by 31%.
11. In connection with the Hudson merger agreement, Dime and Hudson
entered into a
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Stock Option Agreement designed to discourage third party bids for Dime. Under
the Stock Option Agreement, Hudson can purchase up to 19.9% of Dime's common
stock for $17.75 per share (the "Lock-up Option"). The Lock-up Option is
generally triggered if (a) a third party acquires beneficial ownership of 25% or
more of Dime's outstanding common stock; or (b) Dime enters into a merger
agreement with a third party or the Company's board of directors recommends a
merger or similar transaction other than the Hudson transaction.
12. If Dime subsequently consummates an alternative transaction or over
50% of Dime is acquired by a third party, Hudson may force Dime to repurchase
the Lock-up Option and all or any part of the shares issued under the Option
from Hudson. In addition, Hudson may surrender the Lock-up Option and any shares
issued under the Lock-up Option for a cash fee to be paid by Dime equal to $50
million.
13. Moreover, in connection with the Hudson merger agreement, the
individual defendants will reap significant financial rewards. All outstanding
stock options issued under Dime's employee and director benefit plans that are
not exercisable will become exercisable because completion of the merger will
constitute a "change in control" under the terms of these plans. In addition,
any restrictions on restricted stock will also lapse at the completion of the
Hudson merger. The Dime options, stock appreciation rights, and restricted stock
that are expected to become exercisable or vest in connection with the Hudson
merger have a value estimated at $4.78 million.
14. Dime United will assume defendant Toal's employment agreement, which
was renegotiated after the merger agreement was executed. Toal's salary will be
at least $900,000 per year, with a target bonus of at least half that amount.
Toal will also be granted options to buy 150,000 shares of Dime United common
stock. Also, Dime's senior management will retain control of Dime United.
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15. In early March 2000, North Fork Bancorp ("North Fork") contacted Dime
to discuss an alternative proposal to purchase the Company. North Fork then
announced its intent to commence a $1.88 billion tender offer to acquire Dime in
a combination of cash and stock. Dime shareholders would get 0.9302 shares of
North Fork common stock and $2.00 in cash for each Dime share, or $17.00 based
upon North Fork's closing price on March 3, 2000. North Fork's proposal
represents over a 31% premium to Dime's closing price of March 3, 2000. In
addition, North Fork's offer represents a 41% premium to the consideration Dime
shareholders will receive under the Hudson merger. It is doubtful that Dime's
senior management would retain their offices if North Fork acquires Dime.
16. The individual defendants have rejected North Fork's offer. Defendant
Toal stated publicly "North Fork's offer is an attempt to destroy a transaction
that is in the best interests of Dime, its shareholders, and the communities it
serves. We are strongly committed to the [Hudson] transaction."
17. The Lock-up Option is designed to compensate Hudson in the event the
merger agreement is terminated pursuant to paragraph 11 above. Hudson's
potential profit from the Lock-up Option does not represent a reasonable
estimate of the damages it would incur as a result of the termination of the
merger agreement. The Lock-up Option is not designed to benefit Dime's
shareholders. Indeed, it may discourage North Fork from increasing its offer
because Hudson will benefit substantially from any such increase. The Lock-up
Option is unenforceable because, among other things, it inhibits the ability of
Dime's directors to negotiate with North Fork for a higher offer which will
enure to the benefit of Dime's shareholders.
18. In light of the North Fork offer, which is vastly superior to the
merger agreement with Hudson, the individual defendants have a fiduciary duty to
inform themselves fully about North
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Fork's offer and to negotiate with North Fork to improve its offer. By rejecting
North Fork's offer out-of-hand, the individual defendants have violated their
fiduciary duties of loyalty and due care which they owe to Dime's shareholders.
19. The individual defendants have refused to enter into any negotiations
with North Fork in an attempt to entrench themselves in their offices with the
Company and Dime United and to protect their substantial salaries and
prestigious positions. The individual defendants' placement of their own
interests ahead of the interests of Dime shareholders is in violation of their
fiduciary duties of loyalty and good faith.
20. Defendant Hudson has knowingly aided and abetted the breaches of
fiduciary duty committed by the other defendants to the detriment of Dime's
shareholders. Hudson is a party to and beneficiary of the unenforceable Lock-up
Option. Hudson and its stockholders are the intended beneficiaries of the wrongs
complained of herein and would be unjustly absent relief in this action.
21. As a result of the actions of defendants, plaintiff and the other
members of the Class will be prevented from obtaining fair consideration for
their shares of Dime common stock unless defendants are enjoined from committing
the wrongs complained of herein.
22. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment against defendants as follows:
(a) Declaring this to be a proper class action and designating plaintiff
as class representative;
(b) Rescinding the Lock-up Option granted to Hudson;
(c) Preliminarily and permanently enjoining defendants from taking any
steps to give effect to the Lock-up Option pending rescission
thereof;
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(d) Enjoining preliminarily and permanently the merger agreement between
Dime and Hudson;
(e) To the extent, if any, that the Hudson merger is consummated prior
to the entry of this Court's final judgment, rescinding the same or
awarding rescissory damages to the Class;
(f) Directing that defendants account to plaintiff and the Class for all
damages caused them and account for all profits and any special
benefits obtained by defendants as a result of their unlawful
conduct;
(g) Awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for the fees and expenses of
plaintiff's attorneys and experts; and
(h) Granting such other and further relief as the Court deems
appropriate.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
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Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Of Counsel:
STULL, STULL & BRODY
6 East 45th Street
New York, NY 10017
(212) 687-7230
WEISS & YOURMAN
551 Fifth Avenue, Suite 1600
New York, NY 10176
(212) 682-3025