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Exhibit 20
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
CHESAPEAKE CORPORATION and
SHEFFIELD, INC.,
Plaintiffs,
V. No.
SHOREWOOD PACKAGING
CORPORATION,
Defendant.
COMPLAINT
Plaintiffs Chesapeake Corporation ("Chesapeake") and Sheffield, Inc.
("Purchaser," jointly with Chesapeake, "Plaintiffs") file this action seeking
declaratory relief in connection with (i) Plaintiffs' offer to purchase shares
of defendant Shorewood Packaging Corporation's ("Shorewood") common stock, and
(ii) Chesapeake's solicitation of written consents from the stockholders of
Shorewood to take certain actions without a stockholder meeting.
JURISDICTION AND VENUE
1. This Court has jurisdiction over this action pursuant to 15 U.S.C.
(S) 78aa, 28 U.S.C. (S) 1331(a) and 28 U.S.C. (S) 1337(a).
2. Venue in this Court is proper pursuant to 15 U.S.C. (S) 78aa and 28
U.S.C. (S) 1391(b).
THE PARTIES
3. Plaintiff Chesapeake is a corporation incorporated under the laws of
the Commonwealth of Virginia with its principal executive offices located in
Richmond, Virginia. Chesapeake is primarily engaged in the manufacture and sale
of specialty packaging, point-of-purchase displays, and merchandising services.
Chesapeake's shares are listed on the New York Stock Exchange ("NYSE").
Chesapeake is a beneficial owner of Shorewood common stock.
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4. Plaintiff Purchaser is a corporation incorporated under the laws of
the State of Delaware and a wholly-owned subsidiary of Chesapeake. Purchaser was
formed to acquire all of the outstanding shares of Shorewood through the tender
offer and merger proposal described below. Purchaser is the record owner of 100
shares of Shorewood common stock.
5. Defendant Shorewood is a corporation incorporated under the laws of
the State of Delaware with its principal executive offices located in New York,
New York. Shorewood and its subsidiaries print and manufacture paperboard
packaging through operations in the United States, Canada and China.
6. Shorewood's common stock is registered pursuant to Section 12(b) of
the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. (S) 781(b),
and is listed and traded on the NYSE.
THE TENDER OFFER
7. Plaintiffs commenced today a fully-financed, non-coercive, non
discriminatory, all-cash, all-shares premium tender offer for Shorewood's common
stock at $17.25 per share (the "Tender Offer"). Chesapeake commenced the Tender
Offer by issuing a press release summarizing the terms of the Tender Offer (the
"Press Release") and publishing a summary advertisement of the Tender Offer in
the national edition of The Wall Street Journal (the "Summary Advertisement").
8. Shorewood stockholders whose shares are purchased by Purchaser in
the Tender Offer will receive $17.25 per share in cash. The $17.25 in cash
offered in the Tender Offer represents approximately a 45% premium over the
closing price of Shorewood's common stock on November 9, 1999, the last full
trading day before Chesapeake made a confidential proposal to acquire Shorewood
in a negotiated transaction at $16.50 per share. The $17.25 in cash offered in
the Tender Offer represents more than a 28% premium above the closing price of
Shorewood's stock on November 17, 1999, the last full trading day before
Shorewood disclosed to the markets Chesapeake's confidential proposal. The
Tender Offer is conditioned upon, among other things, (i) the tender and
purchase of sufficient Shorewood shares to give Plaintiffs a majority of the
outstanding Shorewood shares on a fully diluted basis, (ii) the exemption of the
Tender Offer from Section 203 of the Delaware General Corporation Law ("Section
203"), and (iii) the redemption or inapplicability of Shorewood's stockholder
rights plan (the "Rights Plan").
9. The Tender Offer is the initial step in a two-step transaction
pursuant to which Chesapeake proposes to acquire all of the outstanding shares
of Shorewood
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stock. If successful, Chesapeake intends to follow the Tender Offer with a
merger or similar business combination with Purchaser or a direct or indirect
subsidiary of Chesapeake (the "Proposed Merger," and together with the Tender
Offer, the "Proposed Acquisition"). Pursuant to the Proposed Merger, it is
currently anticipated that each then outstanding share of Shorewood (other than
shares owned by Chesapeake or any of its subsidiaries or shares held in the
treasury of Shorewood) would be converted into the right to receive an amount in
cash equal to the price paid in the Tender Offer.
10. The Tender Offer is, and will continue to be, in full compliance
with all applicable federal laws and regulations governing tender offers, i.e.,
the provisions of the Williams Act, embodied in Sections 14(d) and 14(e) of the
Exchange Act, 15 U.S.C. (S)(S) 78n(d) and (e), and the rules and regulations
promulgated thereunder by the Securities and Exchange Commission ("SEC"). In
accordance with the Exchange Act and the rules and regulations promulgated
thereunder by the SEC, Plaintiffs commenced the Tender Offer by issuing the
Press Release and publishing the Summary Advertisement. In connection with the
Tender Offer and in accordance with the Exchange Act and the rules and
regulations promulgated thereunder by the SEC, Plaintiffs will file promptly,
and in any event within five business days, a Schedule 14D-1 with the SEC (the
"Schedule 14D-1") pursuant to Section 14(d)(1) of the Exchange Act and Rule
14d-3 promulgated thereunder, 17 C.F.R. (S) 240.14d- 3.
11. Section 14(d) of the Exchange Act, 15 U.S.C. (S) 78n(d), and the
rules and regulations promulgated thereunder by the SEC, require that any person
or entity making a tender offer for beneficial ownership of more than five
percent of a class of registered equity securities file and disclose certain
specified information with respect to the tender offer. Any such bidder must
disclose, among other things, its identity and background, past contacts,
transactions or negotiations between the bidder and the company in whom the
bidder seeks to acquire stock, the source and amount of funds needed for the
tender offer, and any plans the bidder may have to change the capitalization,
corporate structure or business of the company whose stock it seeks to acquire.
12. In addition, Section 14(e) of the Exchange Act, 15 U.S.C. (S)
78n(e), makes it "unlawful for any person to make any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statement made, in light of the circumstances under which they are made, not
misleading, or to engage in any fraudulent, deceptive, or manipulative acts or
practice in connection with any tender offer." Plaintiffs have complied fully
with the Exchange Act and all rules and regulations promulgated thereunder.
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13. In connection with the Tender Offer, Plaintiffs will disseminate to
Shorewood's stockholders an offer to purchase containing all material
information required by applicable law to be disclosed (the "Offer to
Purchase").
THE CONSENT SOLICITATION
14. In furtherance of the Proposed Acquisition, Chesapeake publicly
disclosed in the Press Release its intention to solicit written consents from
Shorewood's stockholders to take certain actions without a stockholder meeting
(the "Consent Solicitation"). The purpose of the Consent Solicitation is to
obtain sufficient consents from Shorewood's stockholders in order to (i) amend
Shorewood's bylaws to remove the provision establishing a staggered board of
directors, (ii) remove all current members of the Shorewood Board, (iii) reduce
the authorized number of Shorewood directors to three, (iv) elect to the
Shorewood Board three individuals nominated by Chesapeake (the "Nominees"), and
(v) repeal any recent or subsequent amendments to the Shorewood Amended and
Restated By-laws (the "Bylaws"). If elected, the Nominees will consider, subject
to their fiduciary duties, (i) redeeming the Rights Plan (or amending the Rights
Plan to make it inapplicable to the Proposed Acquisition), (ii) approving the
Tender Offer under Section 203, and (iii) taking such other actions as may be
required to expedite the prompt consummation of the Proposed Acquisition.
15. Section 14(a) of the Exchange Act, 15 U.S.C. (S) 78n(a), and the
rules and regulations promulgated thereunder by the SEC, require that a person
soliciting an authorization with respect to any registered security file and
disclose certain specific information with respect to the solicitation. Any such
solicitor must disclose, among other things, its identity, the date, time and
place when the proposed action will be taken, and any substantial interest of
the solicitor in the matters to be acted upon. In addition, Rule 14a-9, 17
C.F.R. (S) 240.14a-9, promulgated by the SEC under Section 14(a) of the Exchange
Act, provides that "[n]o solicitation subject to this regulation shall be
made........ containing any statement of which, at the time and in the light of
the circumstances under which it is made, is false or misleading with respect to
any material fact, or which omits to state any material fact necessary in order
to make the statements therein not false or misleading or necessary to correct
any statement in any earlier communication with respect to the solicitation of a
proxy for the same meeting or subject matter which has become false or
misleading."
16. Chesapeake' preliminary materials relating to the Consent
Solicitation will be filed promptly with the SEC (the "Consent Solicitation
Materials"). Chesapeake believes the Consent Solicitation Materials are in full
compliance with
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Section 14(a) of the Exchange Act and the rules and regulations promulgated
thereunder by the SEC, including Rule 14a-9. Chesapeake will disseminate to
Shorewood's stockholders the Consent Solicitation Materials disclosing all
material information required by applicable law.
17. In furtherance of the Consent Solicitation, Purchaser is demanding
that Shorewood produce a list of its stockholders and related stocklist
materials.
DECLARATORY RELIEF
18. The Declaratory Judgment Act, 28 U.S.C. (S) 2201, provides that
"[i]n a case of actual controversy within its jurisdiction. . . . any court of
the United States, upon the filing of an appropriate pleading, may declare the
rights and other legal relations of any interested party seeking such
declaration." Plaintiffs are entitled to a declaratory judgment that the
Schedule 14D-1 and all exhibits thereto and the Consent Solicitation Materials
are proper and in compliance with all applicable securities laws, rules and
regulations.
19. Although the Tender Offer, Proposed Merger and Proposed Acquisition
are fairly and attractively priced, Plaintiffs reasonably expect that Shorewood
will attempt to thwart or delay Plaintiffs' lawful efforts to consummate the
Tender Offer and pursue the Consent Solicitation. Plaintiffs believe Shorewood
will seek to delay and defeat the Tender Offer and Consent Solicitation through
efforts including the filing of a meritless suit claiming that public
disclosures and filings made by Plaintiffs in conjunction with the Tender Offer
and the Consent Solicitation violate applicable federal securities laws and
regulations. Thus, there is a substantial controversy between parties having
adverse interests which is of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.
20. In the absence of declaratory relief, Plaintiffs will suffer
irreparable harm. As evidenced by the course of action that Shorewood has
pursued to date and the actions taken generally by companies that receive
unsolicited acquisition proposals, Shorewood will likely defend against the
Proposed Acquisition and the Consent Solicitation by, among other things, filing
false claims designed to delay or defeat the Proposed Acquisition and the
Consent Solicitation. A declaratory judgment that the disclosures in the
Schedule 14D-1, the Offer to Purchase and the Consent Solicitation Materials
comply with all applicable federal laws will serve the purpose of adjudicating
the interests of the parties, resolving any complaints concerning the propriety
of the Tender Offer or the Consent Solicitation under federal law and permitting
an otherwise lawful transaction to proceed.
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21. Plaintiffs therefore request pursuant to the Declaratory Judgment
Act, 28 U.S.C. (S)(S) 2201 and 2202, that this Court enter a declaratory
judgment that the public disclosures and documents filed with the SEC by
plaintiffs and which are being disseminated to Shorewood stockholders in
connection with the Tender Offer and the Consent Solicitation comply fully with
all applicable provisions of law.
WHEREFORE, Plaintiffs respectfully request that this Court:
a. declare that Plaintiffs have disclosed all information
required by, and are otherwise in all respects in compliance with, all
applicable laws and other obligations, including, without limitation,
Sections 14(a), 14(d) and 14(e) of the Exchange Act and any other
federal securities laws, rules or regulations deemed or claimed to be
applicable to the Schedule 14D-1, the Tender Offer, the Consent
Solicitation or the Consent Solicitation Materials;
b. award plaintiffs their costs and disbursements in this
action, including reasonable attorneys' fees; and
c. grant plaintiffs such other and further relief as this
Court may deem just and proper.
/s/ R. Franklin Balotti
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R. Franklin Balotti
J. Travis Laster
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
(302) 658-6541
Attorneys for Plaintiffs
Dated: December 3, 1999
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