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Exhibit 24
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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WILLIAM STEINER, :
:
Plaintiff, :
:
-against- :
:
CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : C.A. No. 13940
H. CLARK, JR., E.J. MOONEY, JR., R.J. :
DAY, L.E. AKIN, J.E. JONES, R.J. :
DANIELS, W.N. CALDWELL, J.T. HORTON, :
R.G. WALLACE, STEPHANIE P. MARSHALL, :
G.E. MacDOUGAL, J.F. RIORDAN and :
R.T. STEWART, :
:
Defendants. :
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NOTICE OF MOTION
----------------
TO: Jesse Finkelstein, Esquire
Richards, Layton & Finger
One Rodney Square
Wilmington, DE 19801
PLEASE TAKE NOTICE that the within Motion will be presented at the
earliest time convenient to the Court and counsel.
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ JOSEPH A. ROSENTHAL
------------------------------------------
Joseph A. Rosenthal
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
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IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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WILLIAM STEINER, :
:
Plaintiff, :
:
-against- :
:
CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : C.A. No. 13940
H. CLARK, JR., E.J. MOONEY, JR., R.J. :
DAY, L.E. AKIN, J.E. JONES, R.J. :
DANIELS, W.N. CALDWELL, J.T. HORTON, :
R.G. WALLACE, STEPHANIE P. MARSHALL, :
G.E. MacDOUGAL, J.F. RIORDAN and :
R.T. STEWART, :
:
Defendants. :
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MOTION
------
Plaintiff moves for leave to file an amended complaint in the form
attached hereto as Exhibit A. The grounds for this motion are that the amended
complaint contains allegations concerning events which have taken place since
this action was filed in December 1994.
In compliance with Rule 15(aa), plaintiff avers that the within amended
complaint is in full substitution for the complaint heretofore filed on
December 22, 1994.
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ JOSEPH A. ROSENTHAL
------------------------------------------
Joseph A. Rosenthal
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
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IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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WILLIAM STEINER, on behalf of himself :
and all others similarly situated, :
: Civil Action
Plaintiffs, : No. 13940
:
-against- : AMENDED
: CLASS ACTION
CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : COMPLAINT
H. CLARK, JR., E.J. MOONEY, JR., R.J. : ------------
DAY, L.E. AKIN, J.E. JONES, R.J. :
DANIELS, W.N. CALDWELL, J.T. HORTON, :
R.G. WALLACE, STEPHANIE P. MARSHALL, :
G.E. MacDOUGAL, J.F. RIORDAN and :
R.T. STEWART, :
:
Defendants. :
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Plaintiff, by and through his attorneys, alleges as follows:
1. Plaintiff brings this action as a class action on behalf of himself
and all other shareholders of CBI Industries, Inc. ("CBI" or the "Company") who
are similarly situated, to void and enjoin defendants' efforts to entrench
themselves and solidify their control of CBI and thwart any takeover of the
Company by, among other things, increasing the Company's anti-takeover devices,
such as its poison pill or shareholder rights plan, described below, and/or
refusing to rescind such antitakeover devices despite the existence of a value
maximizing offer.
2. Defendants' actions represent an effort by the individual
defendants to entrench themselves in office so that they may continue to
receive the substantial
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salaries, compensation and other benefits and perquisites of their offices.
3. The individual defendants are abusing their fiduciary positions of
control over CBI to thwart Praxair, Inc.'s ("Praxair") legitimate attempts to
acquire the Company, to prevent CBI's shareholders from receiving and/or acting
upon bona fide offers for the Company, and are seeking to use corporate
resources to entrench themselves in the management of the Company. The actions
of the individual defendants constitute a breach of their fiduciary duties to
maximize shareholder value, to not consider their own interests over that of
the public shareholders, and to respond reasonably to offers for CBI.
PARTIES
-------
4. Plaintiff is the owner of CBI common stock, and has owned such
stock at all times relevant herein.
5. CBI is a holding company which, through numerous operating
subsidiaries, operates in three basic areas: contracting services, industrial
gases and investments. In recent time, the Company's industrial gases area,
organized under the Liquid Carbonic Industries Corporation ("Liquid Carbonic")
subsidiary, has contributed nearly 90% of CBI's pre-tax income.
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6. The individually named defendants are members of the CBI Board of
Directors. The following defendants are also officers and thus inside
directors of CBI:
(a) Defendant J.E. Jones ("Jones") is the chairman of CBI's Board
of Directors, president, and chief executive officer. For the year ended
December 31, 1993, Jones earned a salary of $530,000, a bonus of $77,000, and
restricted stock awards of $515,250.
(b) Defendant L.E. Akin ("Akin") is an executive vice president,
and the president of CBI subsidiary, Chicago Bridge & Iron Company (the main
corporation under which the Company's contracting services area is organized).
For the year ended December 31, 1993, Akin earned a salary of $290,000, a
bonus of $35,000, and restricted stock awards of $200,375.
(c) Defendant R.J. Daniels ("Daniels") is an executive vice
president, and president of Liquid Carbonic. For the year ended December 31,
1993, Daniels earned a salary of $265,000, a bonus of $43,515 and a restricted
stock award of $171,750.
(d) Defendant G.L. Schueppert ("Schueppert") is an executive vice
president, and the Company's chief financial officer. For the year ended
December 31, 1993, Schueppert earned a salary of $305,000, a bonus of $35,000,
and a restricted stock award of $160,875.
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The remaining defendants are outside or non-officer directors of the Company.
7. By virtue of the individual defendants' positions as directors
and/or officers of the Company, the defendants were and are in a fiduciary
relationship with plaintiff and the other public stockholders of the Company
and owe to plaintiff and the other members of the Class the highest obligations
of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
------------------------
8. Plaintiff brings this action for injunctive and other relief on his
own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court
of Chancery and on behalf of all common stockholders of CBI (except defendants
herein and any person, firm, trust, corporation or other entity related to or
affiliated with any of the defendants) or their successors in interest, who are
bring deprived of the opportunity to maximize the value of their CBI shares by
the wrongful acts of the individual defendants described herein ("Class").
9. This action is properly maintainable as a class action for the
following reasons:
(a) The Class for whose benefit this action is brought is so
numerous that joinder of all class members is impracticable. There are more
than 37 million common shares of CBI outstanding, owned by thousands of
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stockholders of record. Members of the class are disbursed throughout the
United States.
(b) There are questions of law and fact which are common to members
of the Class and which predominate over all questions affecting only individual
members, including whether the defendants have breached the fiduciary duties
owned by them to plaintiff and members of the Class by reason of their efforts
to entrench themselves in office, protect the interests of other firms with
which they are affiliated and prevent CBI public stockholders from maximizing
the value of their holdings.
(c) The claims of plaintiff are typical of the claims of the other
members of the Class and plaintiff has no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of this
action and has retained competent counsel experienced in litigation in this
nature. Accordingly, plaintiff is an adequate representative of the Class and
will fairly and adequately protect the interests of the Class.
(e) 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
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incompatible standards of conduct for the party opposing the Class.
(f) Defendants have acted and are about to act on grounds
generally applicable to the Class, thereby making appropriate final injunctive
or other equitable relief with respect to the Class as a whole.
FACTUAL BACKGROUND
------------------
10. CBI is a company with operating subsidiaries in three areas:
contracting services, industrial gases and investments. The Company's
industrial gases segment, which is organized under Liquid Carbonic, is the
world's largest supplier of carbon dioxide, and makes and markets other gases
for industrial, medical and specialty applications. In 1993, it was the
Company's most profitable division of the Company, and currently contributes
approximately 90% of the Company's pre-tax revenue.
11. Liquid Carbonic will likely be the greatest contributor to CBI's
revenues in the future as well. In November 1994, for instance, CBI announced
that its contracting services area's gross profit and income from operation in
the 1994 third quarter were hurt in the United States by narrowing margins,
mainly due to the continuing slow pace of capital spending for new or
replacement vessels for the refining, chemical, and pulp and paper industries.
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12. Nonetheless, the individual defendants have done nothing to
maximize shareholder value, and to enable CBI's shareholders to realize the
value of Liquid Carbonics. Instead, they have taken steps to entrench
themselves and to maintain their control over all of the three areas of CBI's
business.
Airgas' 1994 Offer
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13. Since as early as November, 1994 the individual defendants knew
that, based on the value of Liquid Carbonics, as well as the other aspects of
CBI's business, the Company presented itself as an outstanding merger target for
potential bidders. It was confirmed that the Company was "in play" when, at or
about that time, Airgas made an offer for the Company.
14. On December 20, 1994, CBI first publicly announced that sometime
in early November, Airgas Inc. ("Airgas"), a fast growing distributor of
industrial, medical and specialty gases, had made an unsolicited offer in which
it proposed the spin-off, in the form of a dividend to CBI shareholders of the
Contracting Segment and Investment Segment of its business, as new companies on
a debt-free basis, and the merger of CBI, which would then just own Liquid
Carbonic, with Airgas. In the merger, CBI shareholders would receive 19
million shares of Airgas,
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representing approximately 35% of the Airgas shares to be outstanding after the
merger (the "Airgas Merger Proposal").
15. The Airgas Merger Proposal was projected to enable CBI
shareholders to realize the value inherent in their ownership of Liquid
Carbonic, while still maintaining their shares and thus the ability to obtain
any future accretion in the value of such shares.
16. As an alternative transaction, Airgas offered to purchase Liquid
Carbonics outright for cash of $1.45 billion (which is greater than the total
market capitalization of CBI), part of which would include the assumption of
CBI's over $770 million in debt. This alternative would again enable CBI's
shareholders to realize immediate value from their ownership of Liquid
Carbonic, and would also increase the value of the Contracting and Investment
segments by reducing CBI's debt.
CBI's Rejection Of The Airgas
Proposal and Amendment Of Its
Shareholder Rights Plan
17. Despite the obvious advantages to CBI shareholders of either of
these two proposals, CBI's Board of Directors, allegedly after consideration
and consultation with its financial advisors, Lehman Brothers Inc. and Lynch &
Co., and in a desire to keep CBI independent so that they could entrench
themselves, rejected the offers as inadequate.
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18. Thereafter, Airgas filed under the Hart-Scott-Rodino Act for the
purpose of allowing it to purchase up to 15% of CBI's common stock through open
market or privately negotiated purchases.
19. In response to the obvious takeover attempts by Airgas, and the
realization that CBI was now "in play", CBI's Board of Directors authorized an
amendment to CBI's shareholders rights plan, which significantly lowers the
ownership level required to trigger a distribution of the Rights under the Plan
from 20% to 10%, making a hostile bid for the Company prohibitively expensive.
20. After giving effect to the amendment, the Plan provides that if a
person or group acquires 10% or more of the outstanding CBI common shares, each
Right will entitle its holder, other than the person or group which has
acquired the share, to purchase common shares of CBI having a market value
equal to twice the exercise price of each right.
21. In January, 1995, after its proposal was rejected, Airgas dropped
its merger proposal to CBI.
Praxair's October 29, 1995
Merger Proposal To CBI
22. Praxair is the largest supplier of industrial gases in North and
South America and one of the three largest industrial gas suppliers in the
world. Using air as
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its base raw material, Praxair produces oxygen, nitrogen and argon through
several air separation processes.
23. In approximately June, 1995, Praxair approached CBI in connection
with a potential combination of Praxair and CBI whereby the two companies would
be merged together. After approximately six months of negotiations between
Praxair and CBI, CBI, on October 20, 1995, broke off negotiations.
24. As a result of CBI's determination not to seek a combination with
Praxair, on October 29, 1995 Praxair announced that it intended to commence a
cash or stock tender offer for all the outstanding shares of CBI at $32 per
share -- a transaction which has an estimated worth of approximately $2.1
billion.
25. Rather than negotiating in good faith with Praxair, to obatin the
best possible price for CBI's shareholders, the Individual Defendants have
stated that they will "review the Praxair proposal in due course."
26. They have not, however, rescinded the poison pill. CBI's poison
pill has the effect of entrenching the Individual Defendants in control of CBI,
but the Individual Defendants have refused to rescind, waive or otherwise
abolish the terms of the CBI poison pill.
27. Praxair's tender offer will be for 100% of CBI's outstanding stock
which, in turn, will invoke the poison pill. This will make Praxair's tender
offer
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prohibitively expensive and may well discourage Praxair from continuing its
tender offer.
28. Defendants' failure to rescind, waive or otherwise abolish the
terms of the poison pill, the failure to ease CBI's anti-takeover provisions,
or to otherwise negotiate with Praxair in good faith, constitutes a breach of
defendants' fiduciary duties owed to plaintiff and other members of the Class.
It will have the effect of making the Praxair proposal cost-prohibitive, and
therefore may discourage Praxair from going forward with a tender offer -- the
primary alternative which would enable CBI shareholderss to maximize the value
of their equity holdings.
29. At all times herein, defendants were and are obligated to
adequately consider, in a timely fashion and on an informed basis, any
reasonable proposal from any party, not to place their own self-interests and
personal considerations ahead of the interests of the stockholders and to make
corporate decisions in good faith. The actions of the Individual Defendants in
maintaining and refusing to waive or otherwise rescind the poison pill or to
negotiate in good faith were fundamentally motivated to further their own
self-interests and objectives, and correspondingly preserve and protect their
emoluments and positions in the Company, all in violation of their fiduciary
duties and to the detriment of the shareholders of the Company.
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30. The Individual Defendants' entrenchment motives are evidenced by,
inter alia, the following:
(a) Through the maintenance of the poison pill, and defendants'
failure to waive its terms, defendants have erected a virtually insurmountable
barrier to persons who may wish to acquire CBI, obtain control or take steps to
maximize shareholder value, and are thereby attempting to entrench themselves
in their positions of control and improperly advance their own personal agenda
at the expense of CBI's public stockholders;
(b) In reality, the poison pill provisions are designed to
prevent unsolicited takeovers from succeeding. Defendants' inaction concerning
the waiver or rescission of the poison pill is indicative of their true motives
and objectives; and
(c) Defendants' efforts to increase CBI's anti-takeover devices
when confronted with the Airgas Merger Proposal and to continue the
anti-takeover devices knowing that the Company was the target of a potential
offer by Praxair.
31. In increasing CBI's anti-takeover devices, and failing to waive or
rescind the poison pill, the Individual Defendants have acted to manipulate the
corporate machinery of CBI, thereby impairing the corporate democratic process
within the Company at the expense and to the detriment of the Company's common
stockholders. By
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maintaining the poison pill and increasing the Company's anti-takeover devices,
the Individual Defendants have restrained and impaired the ability of CBI's
stockholders to affect corporate policy, and freely structure the directorial
constituency of the Company. The poison pill, inter alia, impedes shareholder
ability to accumulate shares and associate together to replace incumbent
management, oppose any management initiative, or otherwise affect corporate
policy through stockholder resolutions.
32. As a result of the foregoing, the Individual Defendants have
breached and/or aided and abetted breaches and/or aided and abetted breaches
of fiduciary duties owed to CBI and its stockholders.
33. Unless enjoined by this Court, defendants will breach their
fiduciary duties owed to plaintiff and the other members of the Class and may
benefit themselves in their corporate offices, all to the irreparable harm of
the Class, as aforesaid.
34. Plaintiff and the other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this to be a proper class action;
(b) ordering the Individual Defendants to carry out their
fiduciary duties to plaintiff and the other members of the Class by announcing
their intention to:
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(i) rescind the "poison pill" and any other takeover devices
which would hinder Praxair's hostile offer;
(ii) negotiate in good faith with Praxair to obtain the
greatest possible value for CBI's shareholders;
(iii) undertake an appropriate evaluation of alternatives
designed to maximize value for CBI's public stockholders;
(iv) adequately ensure that no conflicts of interests exist
between defendants' own interests and their fiduciary obligations to public
stockholders or, if such conflicts exist, ensure that all the conflicts would
be resolved in the best interests of CBI's public stockholders; and
(c) ordering defendants, jointly and severally, to account to
plaintiff and the other members of the Class for all damages suffered and to be
suffered by them as a result of the acts and transactions alleged herein;
(d) awarding plaintiff the costs and disbursements of the action,
including a reasonable allowance for plaintiff's attorney's fees and experts'
fees; and
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(e) granting such other and further relief as this Court may deem
to be just and proper.
Dated: October 30, 1995
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:
-----------------------------
First Federal Plaza
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND LABATON RUDOFF
& SUCHAROW, LLP
100 Park Avenue
New York, NY 10017-5563
(212) 907-0700
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CERTIFICATE OF SERVICE
I, Joseph A. Rosenthal, do hereby certify on this 30th day of October,
1995, that I caused two copies of the foregoing Notice of Motion and Motion to
be served by hand delivery upon:
JESSE FINKELSTEIN, ESQUIRE
RICHARDS, LAYTON & FINGER
ONE RODNEY SQUARE
WILMINGTON, DE 19801
/s/ JOSEPH A. ROSENTHAL
-------------------------------
Joseph A. Rosenthal
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