EXHIBIT 99.15
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
PHELPS DODGE CORPORATION, )
a New York corporation and )
CAV CORPORATION, a Delaware corporation, )
)
Plaintiff,
)
v. ) C.A. No. 17398-NC
)
CYPRUS AMAX MINERALS )
COMPANY, a Delaware corporation, ) COMPLAINT FOR DECLARATORY
Milton H. Ward, Linda G. Alvarado, ) AND INJUNCTIVE RELIEF
George S. Ansell, Rockwell A. Schnabel, )
Thomas V. Falkie, Ann Maynard Gray, )
Theodore M. Solso, John H. Stookey, )
Billie B. Turner and )
ASARCO INCORPORATED, a )
New Jersey corporation, )
Defendants. )
Plaintiffs Phelps Dodge Corporation and CAV Corporation (collectively,
"Phelps Dodge"), by and through their undersigned attorneys, upon knowledge as
to themselves and their own acts and upon information and belief as to all other
matters, allege as follows:
NATURE OF THE ACTION
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1. On July 15, 1999, ASARCO Incorporated ("ASARCO") and Cyprus Amax
Minerals Company ("Cyprus Amax") announced a non-premium proposed merger (the
"ASARCO Cyprus Merger"). Their merger agreement (the "Merger Agreement") --
which was not publicly disclosed until August 20, more than a month after the
announcement -- is illegal. It purports to prohibit directors of a Delaware
corporation from receiving, gathering, providing or
exchanging information concerning any merger or acquisition proposal by Phelps
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Dodge (or any other interested party) until the stockholders of both companies
vote on the ASARCO Cyprus Merger. It cannot be terminated to pursue a clearly
superior transaction, such as the three-way combination proposed by Phelps
Dodge. It imposes draconian financial penalties -- in excess of 6% of the market
capitalization of ASARCO -- if the deal is not consummated according to
management's plan. In short, this Merger Agreement is dead on arrival, a fact
that likely explains why the companies secreted it so long.
2. The Merger Agreement's "No Solicitation" provisions -- in
reality, "no-see, no-hear, no-talk" provisions -- are particularly outrageous.
The directors of Cyprus Amax and ASARCO have contracted away their duty of care;
they are not permitted even to learn about, let alone evaluate meaningfully, any
alternative proposal -- no matter how compelling, financially rewarding and
industrially sound. And, while the Merger Agreement makes the gracious
concession of supposedly permitting the directors to change or withdraw their
recom mendation of the ASARCO Cyprus Merger, it renders that right meaningless.
A director cannot make an informed decision about the merits of a proposed
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transaction -- or, equally important, the relative merits of two strategic
alternatives -- without the ability to communicate freely with interested
parties. This Court has never sanctioned what this Merger Agreement purports to
do: require directors to keep their eyes wide shut.
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3. Apparently not content to hide behind the Merger Agreement's
lock-up provisions, ASARCO and Cyprus Amax have engaged in a persistent pattern
of conduct that reeks of entrenchment and undue defensiveness. Among other
things, they have:
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. attempted to rig the proxy process -- Blasius Indus., Inc. v. Atlas
------------------------------
Corp., 564 A.2d 651 (Del. Ch. 1989), be damned -- by setting meeting and
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record dates designed to favor unfairly management's preferred transaction;
. opposed Phelps Dodge's lawful requests for stockholder list
information to allow Phelps Dodge to communicate directly -- and on a level
playing field -- with the companies' owners;
. granted senior management compensation and benefits packages that not
only lavishly "reward" entrenchment, but unfairly shift value from
stockholders to management;
. included in the Merger Agreement provisions that virtually guarantee
the jobs of senior management through 2002; and
. stood -- and hid -- behind the Merger Agreement's unlawful
restrictions, refus ing to meet, discuss or exchange information with
Phelps Dodge concerning its proposal.
This is not the conduct of responsible boards of directors.
4. Cyprus Amax's directors have abdicated their responsibilities.
Their actions to date should be enjoined, and they should be required to act in
accordance with law going forward.
THE PARTIES
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5. Plaintiff Phelps Dodge is a New York corporation with its
principal executive offices in Phoenix, Arizona. Phelps Dodge is one of the
world's leading producers of copper and has achieved its premier status through
safe, efficient and environmentally sound
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production of low-cost, high-quality metals and minerals. Phelps Dodge
beneficially owns common stock of both ASARCO and Cyprus Amax.
6. Plaintiff CAV Corporation is a Delaware corporation directly
owned by Phelps Dodge. CAV Corporation owns 100 shares of common stock of
Cyprus Amax.
7. Defendant Cyprus Amax is a Delaware corporation with its
principal place of business in Englewood, Colorado. Cyprus Amax is a
diversified mining company engaged in the exploration for and extraction,
processing and marketing of mineral resources, including copper, molybdenum,
coal and gold.
8. Defendant Milton H. Ward ("Ward") has been Chairman, Chief
Executive Officer and President of Defendant Cyprus Amax since 1992. He is a
director of Cyprus Amax and owes fiduciary duties to Cyprus Amax and its
shareholders.
9. Defendants Linda G. Alvarado, George S. Ansell, Rockwell A.
Schnabel, Thomas V. Falkie, Ann Maynard Gray, Theodore M. Solso, John H. Stookey
and Billie B. Turner (the "Director Defendants") are current directors of Cyprus
Amax and all owe fiduciary duties to Cyprus Amex and its shareholders.
10. Defendant ASARCO is a New Jersey corporation with its principal
place of business in New York, New York. ASARCO is a leading producer of
copper, specialty chemicals and aggregates, and is registered to do business in
Delaware. The Company's copper business includes integrated mining, smelting
and refining operations in North America and Peru.
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11. Phelps Dodge has commenced a parallel action alleging, inter
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alia, breaches of fiduciary duty against ASARCO, its Chairman and Chief
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Executive Officer, Francis R. McAllister ("McAllister"), and its directors in
the Superior Court of the State of New Jersey.
FACTUAL BACKGROUND
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I. The Proposed Merger of ASARCO and Cyprus Amax
---------------------------------------------
12. On July 15, 1999, ASARCO and Cyprus Amax announced a so-called
"merger of equals" under which ASARCO shareholders are to receive one share of
stock in the merged company and Cyprus Amax shareholders are to receive 0.765
shares per share of Cyprus Amax stock they currently hold. The proposed new
company, ASARCO Cyprus Incorporated ("ASARCO Cyprus"), would have its corporate
headquarters in New York City and its opera tions headquarters in Tempe,
Arizona. Cyprus Amax shareholders would receive no premium by way of the
transaction,
13. ASARCO Cyprus would have a sixteen person board of directors with
eight members nominated by ASARCO and eight by Cyprus Amax. Ward, Cyprus Amax's
Chairman, President and Chief Executive Officer, and McAllister, ASARCO's
Chairman and Chief Executive Officer, would serve as Co-Chief Executive Officers
and directors of ASARCO Cyprus.
14. The market reaction to the proposed no-premium merger was hardly
inspired, pushing both companies' stock prices down. On July 14, 1999, the
common stock of Cyprus Amax and ASARCO was trading at highs of 14-1/2 and 19-
1/2, respectively. On July 19, 1999, the common stock of Cyprus Amex and ASARCO
was trading at highs of 14 and 19-1/16, respectively. Although the ASARCO
Cyprus Merger initially included projected cash
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synergies of $100 million per year, plus reduced depreciation of $50 million
annually due to the write-down of certain assets (this estimate was later
increased to $200 million), the market has not recognized any incremental value
in the current share prices of either company. The proposed merger has also been
criticized for its lack of a plan to integrate operations, and its lack of asset
rationalization.
15. The details of the Merger Agreement were not finally disclosed to
the public until August 20, 1999, over a month after the merger was announced
and only after ASARCO and Cyprus Amax publicized that they were rejecting a
three-way merger proposed by Phelps Dodge. By hiding the self-serving
restrictive provisions of their Merger Agreement from public view, the directors
of ASARCO and Cyprus Amax have attempted to shield their true objective of
entrenching their positions even at the expense of a better proposal for their
shareholders.
II. The CEOS of ASARCO and Cyprus Amex Refuse to Talk with Phelps Dodge
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16. The time-way merger proposal offered by Phelps Dodge was made on
August 10, 1999, when Douglas Yearley, CEO of Phelps Dodge ("Yearley"),
telephoned Cyprus Amax's Ward and ASARCO's McAllister, who were meeting together
in New York.
17. This proposal was immediately -- and summarily -- rejected. At
approximately 6:45 that evening, a few hours after the proposal was made,
McAllister and Ward forwarded a short letter to Yearley which stated simply that
pursuant to the terms of the Merger Agreement, Ward and McAllister felt they
"were not at liberty to have a discussion of the nature you were suggesting
today." Exhibit 1. A copy of the Merger Agreement was not provided to
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Phelps Dodge, and thus it was unclear at that stage why the CEOs of ASARCO and
Cyprus Amax would not even entertain discussions with Phelps Dodge.
18. On August 11, 1999, Yearley and Phelps Dodge President, J. Steven
Whisler, again requested a meeting with Cyprus Amax and ASARCO, in a letter to
Ward and McAllister laying out the basic terms of the proposed merger. Exhibit
2. The letter explained "that a three-way combination . . . would create
superior shareholder value for the shareholders of ASARCO and Cyprus Amax."
Under the proposed merger, "all of the outstanding common stock of both ASARCO
and Cyprus Amax [would] be exchanged for Phelps Dodge common stock" and "[t]he
transaction would be tax free" to ASARCO and Cyprus Amax shareholders.
19. Specifically, the August 11 letter stated that Phelps Dodge was
prepared to offer shareholders of ASARCO and Cyprus Amax an exchange ratio of
0.3756 Phelps Dodge common shares for each ASARCO common share, and 0.2874
Phelps Dodge common shams for each Cyprus Amax common share. These exchange
ratios represented a premium of approxi mately 25%, based on the then-market
prices for ASARCO and Cyprus Amax shares. Because the benefits to the
shareholders of ASARCO and Cyprus Amax of a three-way merger with Phelps Dodge
are significantly greater than the currently proposed ASARCO Cyprus Merger,
Phelps Dodge once again urged McAllister and Ward to consider the proposal. The
CEOs of ASARCO and Cyprus Amax did not wait long, however, before refusing to
consider the proposed three-way merger.
20. On the morning of August 12,1999, Yearley received a telephone
call frorn McAllister and Ward again refusing to discuss Phelps Dodge's
proposal. Once again, the
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CEOs of ASARCO and Cyprus Amax did not explain what prevented them from even
talking to Phelps Dodge.
21. Ward and McAllister's stubborn refusals to communicate with
Phelps Dodge demonstrated that there would be no serious consideration of a
three-way merger of Phelps Dodge, Cyprus Amax and ASARCO. Their conduct
strongly suggests their true motive is to entrench and perpetuate their current
positions and lucrative compensation packages through the creation of ASARCO
Cyprus, while abandoning their duties to act in the best interests of their
companies and shareholders by exploring a merger with Phelps Dodge. In short,
the CEOs of ASARCO and Cyprus Amax are depriving the stockholders of their
companies of the opportunity to consider a premium proposal from which the
shareholders stand to benefit significantly.
III. The Superiority of the Phelps Dodge Proposal
--------------------------------------------
22. An analysis of the three-way merger proposed by Phelps Dodge
demon strates compelling benefits to all three companies. These
include:
(a) a significant premium, of approximately 30% as of the August
20, 1999 proposal date, and a quadrupling of dividends to
sharehold ers;
(b) the increased ability of the combined company to integrate
south west U.S. mining operations, administrative functions
in Chile and Peru and worldwide exploration and development
activities;
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(c) the increased financial strength of the combined company and
its ability to create a world-class portfolio of cost-
competitive mining assets;
(d) a formidable management team, at both the operating and corpo
rate levels, with solid credibility in the marketplace;
(e) the capacity to eliminate substantial overhead, exploration,
pur chasing and other expenses through consolidation;
(f) tremendous operating leverage, together with sufficient
diversity in other businesses to mitigate cyclical downturns;
(g) the ability of the combined company to reduce capital expendi
tures;
(h) a strong liquid balance sheet, with excellent access to
capital; and
(i) the combination of all of these factors, creating greater
shareholder value on an ongoing basis for the shareholders of
all three companies.
23. In addition, the three-way transaction proposed by Phelps Dodge
would bring significant benefits to shareholders of all three corporations.
Specifically, a three-way merger would lead to cost savings well in excess of
the amounts that could be achieved through the pending ASARCO Cyprus Merger.
Phelps Dodge estimates that the annual cash cost savings would be at least $200
million, with additional non-cash savings of approximately $65 million per year
from lower depreciation charges.
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24. Over the past few years, Phelps Dodge stock has significantly
outper formed the stock of both ASARCO and Cyprus Amax. Furthermore, Phelps
Dodge stock has yielded a total return of 161% over the past ten years, compared
to total returns of negative 20% for ASARCO stock and negative 26% for Cyprus
Amax stock.
25. Moreover, the benefits of the Phelps Dodge proposal remain
superior to the terms of the ASARCO Cyprus Merger regardless of whether both or
only one of ASARCO or Cyprus Amax accept the proposal. For shareholders of
Cyprus Amax, a significant premium is still better than the no-premium ASARCO
Cyprus Amax alternative. The consummation of the ASARCO Cyprus Merger, however,
would prelude this possibility.
26. The metals and mining industry is undergoing a phase of rapid
consolida tion. In view of this dynamic environment and the numerous compelling
benefits to ASARCO, Cyprus Amax and Phelps Dodge, a summary rejection of the
Phelps Dodge proposal is as incomprehensible as it is unjustifiable.
IV. The Boards of Directors' Public Rejection of the Phelps Dodge Proposal
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27. In the face of the adamant refusal by the CEOs of both ASARCO and
Cyprus Amax to give any consideration to Phelps Dodge's proposal, Phelps Dodge
sent letters on August 12, 1999 to the boards of directors of both companies,
outlining the proposed three-way transaction and the ensuing benefits to all
three companies and their shareholders. Exhibit 3. In these letters, Phelps
Dodge also indicated that its proposal with respect to Cyprus Amax was not
contingent on ASARCO's acceptance of the proposal and vice versa.
28. On August 20,1999, Cyprus Amax and ASARCO publicly rejected
Phelps Dodge's "unsolicited proposal." In a joint news release (the "August 20
News Release"), Cyprus
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Amax and ASARCO stated that each of their respective boards had met separately
to consider the proposal, and determined that "pursuing the ASARCO Cyprus Merger
was in [the] best interests of ASARCO and Cyprus Amax stockholders,
respectively. . . ." Cyprus Amax and ASARCO's joint news release stated only
that "Phelps Dodge's proposal is subject to a number of contingencies."
Exhibit 4.
29. The boards of Cyprus Amax and ASARCO refrained from stating the
basis for their decision to reject the Phelps Dodge proposal and did not
identify the "contingen cies" they were referring in the August 20 News
Release. Most certainly, they made no effort to discuss and negotiate any such
"contingencies." Consequently, Defendants unjustifiably continue to deprive
Cyprus Amax stockholders of the opportunity to decide for themselves which
transaction is in fact in their best interests.
30. That same day, following ASARCO and Cyprus Amax's public
rejection of the Phelps Dodge proposal, Phelps Dodge outlined a revised proposal
even more beneficial to the shareholders of ASARCO and Cyprus Amax. Each share
of ASARCO common stock would be converted into 0.4098 Phelps Dodge common
shares, representing a significant premium of approximately 30% to ASARCO
shareholders, based upon share prices of ASARCO and Phelps Dodge before trading
was halted that morning. Each share of Cyprus Amax common stock would be
converted into 0.3135 Phelps Dodge common shares, representing an approximate
29% premium for Cyprus Amax shareholders, based upon share prices of Cyprus Amax
and Phelps Dodge before trading was halted that morning. Exhibit 5.
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31. The market and financial community responded overwhelmingly
favorably to the Phelps Dodge proposal, and the shares of all three companies
rose during trading on August 20.
32. On August 24, 1999, The Wall Street Journal reported that Cyprus
Amax shareholders were eager to embrace a deal with Phelps Dodge. One money
manager with a big stake in Cyprus Amax commented: "[l]ong term, ASARCO Cyprus
is a good combination, but a combination of Phelps, ASARCO and Cyprus is a great
combination."
33. Even Cyprus Amax commented to Bloomberg News that it was prepared
to convene a board meeting to study the increased offer. Gerald Malys, Chief
Financial Officer of Cyprus Amax, informed Bloomberg that Cyprus Amax and ASARCO
had rejected the initial offer because it did not offer enough of a premium. He
added that Cyprus Amax and ASARCO need to begin conversations about the Phelps
Dodge proposal, stating: "I don't think there is any choice in this game but to
listen to what goes on. We need to look at it, they (ASARCO) need to look at
it, we need to talk to each other." Yet the Merger Agreement and the continued
resistance of McAllister, Ward and the boards of directors of ASARCO and Cyprus
Amax remain road blocks to any such discussions -- and thus the proper
discharge of the boards' fiduciary duties.
V. The Unreasonable Terms of the ASARCO Cyprus Merger Agreement
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34. Until August 20, 1999, the provisions of the Merger Agreement
between ASARCO and Cyprus Amax were hidden from their respective shareholders
and the public. On that day, ASARCO and Cyprus Amax filed an S-4 Registration
Statement, attaching the Merger Agreement. The Merger Agreement contains a
number of noteworthy "no-see, no-hear, no-talk" provisions that reflect patent
violations of the fiduciary duties owed by the boards of ASARCO
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and Cyprus Amax. These provisions are transparent efforts to protect a non-
premiurn deal and to entrench management at the expense of shareholders.
35. Sections 5.10(a)(i) and 5.11(a)(i) of the Merger Agreement
restrain both parties, their directors, officers, employees and representatives
from directly or indirectly soliciting, initiating or encouraging (whether by
furnishing information or otherwise), or taking any other action designed to
facilitate any inquiries or the making of any proposal which constitutes or
reasonably could be expected to lead to any "Takeover Proposal." A Takeover
Proposal is defined as any inquiry, proposal or offer, or any improvement,
restatement, amend ment, renewal or reiteration of any such inquiry, proposal
or offer, from any person relating to any direct or indirect acquisition of a
business or equity securities of a party or any of its subsidiaries.
36. More egregiously, Sections 5.10(a)(ii) and 5.11(a)(ii) restrain
both parties, their directors, officers, employees, and representatives from
"participat[ing] in any discussions or negotiations regarding any [alternative]
Takeover Proposal." Thus the Merger Agreement, purports to restrain the Cyprus
Amax board from discussing an unsolicited bid that is demonstra bly superior to
the ASARCO Cyprus Merger.
37. Sections 5.10(b) and 5.11(b) further prohibit the boards of
directors of either company from withdrawing or modifying their approval or
recommendation of the ASARCO Cyprus Merger or the Merger Agreement. The boards
may withdraw their recommendation to approve the merger only if they determine
in good faith, based on the advice of outside counsel, that a failure to do so
would constitute a breach of fiduciary duties owed by the respective boards to
their shareholders.
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38. The sole power that the boards of ASARCO and Cyprus Amax have if
they determine that the ASARCO Cyprus Merger is not in fact in the best
interests of their shareholders is to recommend that the shareholders vote
against approving the merger. The boards of directors of ASARCO and Cyprus Amax
do not have the power to terminate the Merger Agreement, nor may they stop the
vote from occurring.
39. Section 7.1(e) of the Merger Agreement permits ASARCO to
terminate the Merger Agreement if Cyprus Amax breaches Section 5.10 of the
Merger Agreement and Section 7.1(f) entities Cyprus Amax to terminate the Merger
Agreement if ASARCO is in breach of Section 5.11. Under Sections 7.3(a)(ii) and
(b)(ii), if one party is entitled to terminate the Merger Agreement due to the
other party's breach of its obligation not to consider or negotiate other
proposals, the party who may terminate the Merger Agreement is entitled to $45
million (the "Termination Fee"). This is a grossly excessive termination fee
and, in the case of ASARCO, would amount to 6% of its equity value.
40. Under Sections 7.3(a)(i) and (b)(i) of the Merger Agreement,
Cyprus Amax or ASARCO could be subjected to this severe Termination Fee simply
because, in light of another Takeover Proposal, its shareholders voted against
the merger. The only way in which the Termination Fee would not apply is if the
other party's shareholders also voted against the transaction, or if a
transaction pursuant to another Takeover Proposal was not consummated within 18
months.
41. As a consequence of these provisions, the boards of ASARCO and
Cyprus Amax are not allowed to consider superior offers or proposals and are
thereby restrained from acting in the best interests of their shareholders. In
addition, the substantial Termination Fee acts
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as a great disincentive for ASARCO and Cyprus Amax to negotiate with anyone but
each other -- and for shareholders to vote down the ASARCO Cyprus Amax Merger
Agreement. Although the Merger Agreement contains a provision which would allow
the boards of directors to withdraw their recommendations in order to fulfill
their fiduciary duties, it is impossible to see how this would occur if the
directors have been effectively precluded from obtaining information about and
considering in an infomed way any other offers or proposals.
42. In other words, the boards of ASARCO and Cyprus Amax have tied
their hands by agreeing not to solicit, encourage, or facilitate inquiries by
furnishing information, and not to participate in discussions with respect to
any other proposals. It would be difficult, if not impossible, for them to make
any meaningful analysis of another proposal, such as Phelps Dodge's, let alone
to make any recommendation to the shareholders of Cyprus Amax other than to vote
in favor of the ASARCO Cyprus Merger. The restrictions contained in the Merger
Agreement render it impossible for the boards of ASARCO and Cyprus Amax to make
an informed decision as to whether the ASARCO Cyprus Merger is, or is not, in
the best interests of their shareholders. Ward and the Director Defendants of
Cyprus Amax should not be allowed to hide behind unreasonable provisions in the
Merger Agreement as justification for their refusal to allow their shareholders
to consider a for superior proposal.
43. Moreover, there is great financial incentive for the boards to
push ahead with their merger even at the expense of foregoing a better offer for
their shareholders. The ASARCO Cyprus Form S-4 Registration Statement discloses
that "[e]ach of the employee directors of ASARCO and Cyprus Amax may be
entitled to receive compensation if the business combination is completed."
Even if certain directors or senior officers are no longer employed
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by the merged company, the Merger Agreement ensures that they are entitled to
large severance payments. In other words, directors and certain senior officers
of ASARCO and Cyprus Amax are rewarded whether they continue to be employed by
ASARCO Cyprus or not. The key, however, is that the Merger Agreement be
protected. If the Merger Agreement were to be terminated, the Director
Defendants would be entitled neither to continued employment by ASARCO Cyprus,
nor to the large severance payments.
44. Finally, Section 3.2 of the Merger Agreement futher demonstrates
the degree to which the directors of ASARCO and Cyprus Amax have sought to
entrench their positions. It states that any change to the "key executive
officers" of ASARCO Cyprus prior to the stockholder meeting in the year 2002
requires the affirmative vote of at least three-quarters of the directors
constituting the entire board of directors of ASARCO Cyprus. What this means is
that any change in management effectively requires the unanimous vote of the
twelve non management directors.
VI. ASARCO and Cyprus Amax Seek To Manipulate the Merger Vote
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45. The August 20 News Release stated that proxy materials relating
to the ASARCO Cyprus Merger would be mailed to shareholders of record on August
25, 1999, and that shareholder meetings have been set for September 30, 1999.
This timetable in fact contra venes New York Stock Exchange Rules and was
designed to further the interests of the directors over the shareholders.
46. Section 4 of the New York Stock Exchange Rules regulates
shareholder meetings and proxies. Section 401.02 explicitly provides that "[a]
minimum of ten days' notice is required prior to the record date ... established
... for determination of shareholders entitled to
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vote at the meeting." ASARCO and Cyprus Amax gave only seven days' notice to the
NYSE of the August 25, 1999 record date, and did not make the record date public
until August 20, 1999.
47. Although the NYSE has opted not to take action against the
companies for their failure to observe this rule, expediting the record date
nonetheless demonstrates the haste with which ASARCO and Cyprus Amax are
proceeding in order to have their Merger approved by shareholders of both
companies.
48. This abbreviated schedule is no accident. Ward, McAllister and
the boards of their companies seek to prevent more recent shareholders, who
would be aware of and therefore more likely to be in favor of the Phelps Dodge
proposal, from being able to vote on the ASARCO Cyprus Merger. Defendants seek
to preempt the normal flow of trading and move ment in the market of each
company's shares in order to ensure that the shareholders of record entitled to
vote upon the ASARCO Cyprus Mager are those who would be more likely to vote in
favor of it.
49. In addition, Phelps Dodge has sought shareholder lists and
related materials from Cyprus Amax and ASARCO. As of the date of the filing of
this complaint, Cyprus Amax has not responded to a letter requesting the
materials dated August 23, 1999. ASARCO outright opposed an application Phelps
Dodge made to a New Jersey court seeking the information. On August 26,1999,
the court ruled that documents and records must be turned over to Phelps Dodge
within forty-eight hours of the filing of its preliminary proxy materials. In
light of the schedule ASARCO and Cyprus Amax have set for their shareholder
meetings, the delay and refusal to turn over shareholder lists is further
evidence of entrenchment.
VII. ASARCO and Cyprus Amax Issue an Ultimatum to Phelps Dodge
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50. Instead of agreeing to engage in real discussions with Phelps
Dodge, late in the afternoon of August 25,1999, ASARCO and Cyprus Amax issued a
joint ultimatum to Phelps Dodge in the form of a news release (the "August 25
News Release") and a letter from McAllister and Ward to Yearley. Although the
August 25 News Release characterized the letter as a "willingness to negotiate,"
the terms demanded by the CEOs of ASARCO and Cyprus Amax are so unreasonable
that their negotiating posture is illusory and their entrenchment motive all the
more apparent.
51. The conditions, which no company would accept under similar
circum stances, include a requirement that the exchange ratio be increased to
0.4055 shares of Phelps Dodge common stock for each Cyprus Amax share, and
0.5300 Phelps Dodge shares for each ASARCO common share. This demand amounts to
a premium of 70% to 80% of the companies' stock prices after the announcement of
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their no-premium merger but before the first public disclosure of Phelps Dodge's
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initial proposal. Exhibit 6. ASARCO and Cyprus Amax may now be feeling
pressure from their shareholders lo negotiate with Phelps Dodge, but making
unrea sonable and unacceptable demands is nothing more than a ploy to deflect
shareholder attention while pursuing the ASARCO Cyprus Merger.
52. These outrageous demands amount to an unreasonable ultimatum to
Phelps Dodge and make other supposed examples of their willingness to negotiate
all the more illusory. The August 25 News Release reports that during the first
ninety days after completion of the ASARCO Cyprus Merger, Ward and McAllister
will offer their shareholders the right to call a meeting to consider a "bona
fide" proposal. During this time period, ASARCO and Cyprus Amax will allow for
a redemption of their shareholder rights plan and a waiver of any change of
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control provisions in employment contracts. In light of ASARCO's and Cyprus
Amax's conduct to date and the delay -- and burden associated with such a
special meeting -- such "promises" ring hollow. And the companies' statements
regarding employment contracts are so cryptic -- and even contradictory -- as to
be indecipherable.
53. Indeed, the August 25 News Release also announced an equally
illusory attempt at resuscitating shareholder interest in the ASARCO Cyprus
Merger itself. ASARCO and Cyprus Amax now say they will improve the terms of
their deal by including a "special payment" of $5.00 per share to the
shareholders of the merged entity, to be paid as soon as possible after the
consummation of the merger. This "special payment" does not alter the
fundamental economics of the ASARCO Cyprus Merger, nor does it offer the
stockholders of ASARCO and Cyprus Amax greater value than Phelps Dodge's premium
proposal.
54. Nothing in the August 25 News Release or the letter detracts from
one fundamental fact: ASARCO and Cyprus Amax have not changed the unreasonable
terms of their Merger Agreement preventing any serious consideration of the
Phelps Dodge proposal. If there were any doubt, ASARCO and Cyprus Amax
"emphasized" in the August 25 News Release that they were sticking to their
schedule of shareholder meetings for September 30, 1999 to vote on their merger.
In their letter to Yearley, Ward and McAllister made clear that "apart from this
communication, neither party has waived any of its legal or other rights, or
rights or obligations under our merger agreement."Exhibit 6. In other words,
the "no-see, no-hear, no-talk" and other illegal provisions of the Merger
Agreement remain intact.
55. The August 25 letter shows that Ward and McAllister have put
their interests before the interests of the ASARCO and Cyprus Amax shareholders.
The letter states:
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"[w]e strongly believe that the combination of Cyprus Amax and ASARCO, without
the effect of combining further with Phelps Dodge, provides greater value to
Cyprus Amax and ASARCO holders than your August 20 proposal. "In other words,
Ward and McAllister believe that no premium is better than the significant
premium offered by Phelps Dodge. Although that may be true for Ward and
McAllister, it cannot be true for the shareholders of their companies.
56. On August 25, 1999 Phelps Dodge issued a news release confirming
that it had received ASARCO and Cyprus Amax's letter, but that the letter was
not accompanied by any offer to negotiate, talk or exchange information.
Exhibit 7.
57. On August 27,1999, Phelps Dodge filed a Form S-4 Registration
State ment with respect to its Proposal, and announced its intention to offer to
exchange shares of Phelps Dodge common stock for ASARCO and Cyprus Amax shares
(the "Exchange Offer"). However, the Exchange Offer cannot be consummated
unless, among other things, the Director Defendants amend the onerous terms of
the shareholder rights agreement (the "Rights Agree ment" or the "Poison Pill")
or redeem the rights provided therein.
VII. Cyprus Amax's Failure to Redeem or Amend its Shareholder Rights Agreement
-------------------------------------------------------------------------
58. In February 1999, Cyprus Amax adopted the Poison Pill, which was
amended on July 15, 1999. Under the Rights Agreement, Cyprus Amax's board has
authorized and delivered a dividend of one preferred share purchase right (a
"Right") for each share of common stock of the company outstanding on February
28, 1999. Each Right represents the right to purchase 1/100 of a share of
Series A Preferred Stock at a price of $50 per 1/100 of Series A Preferred
Stock. Each share of Series A Preferred Stock has 100 times the voting power of
each share of common stock.
20
59. Distribution of the Rights is triggered by the earliest of the
following events: (i) the tenth day after the first public announcement by
Cyprus Amax or an Acquiring Person (defined as any person who is the beneficial
owner of 15% or more of the common stock then outstanding) that an Acquiring
Person has become such; or (ii) the tenth business day after the commencement of
or the first public announcement of the intention of any person other than the
company, or other associated persons, to commence a tender or exchange offer,
the consum mation of which would result in any Person becoming the beneficial
owner of common stock aggregating 15% or more of the then outstanding common
stock.
60. The Rights Agreement contains a "flip-in" provision. Under this
provi sion, if any person becomes an Acquiring Person, each holder of a Right
will be able to purchase shares under preferential terms. Specifically, he or
she will have the right to purchase that number of shares of common stock, which
at the time the person became an Acquiring Person had it market value of twice
the exercise price, at the current exercise price multiplied by the number of
1/100 of a share of Series A Preferred Stock. This flip-in provision dilutes
the Acquiring Person's holdings and increases the number of shares that the
Acquiring Person would have to purchase in order to consummate a merger.
61. The Rights Agreement also contains a "flip-over" provision, which
arises if, following the time a person becomes an Acquiring Person, (i) Cyprus
Amax shall consolidate with, or merge into, any other person, (ii) any person
shall consolidate or merge with Cyprus Amax and Cyprus Amax is the continuing
corporation of such merger, and in connection with such merger, all or part of
the common shares shall be changed into or exchanged for stock or other
securities of any other person or cash or any other property, or (iii) 50% or
more of Cyprus
21
Amax's assets or earning power are transferred to any other person other than
Cyprus Amax or a wholly owned subsidiary. This "flip-over" provision entitles
each Right holder to buy, at the current exercise price multiplied by the number
of 1/100 Series A Preferred Stock, common stock of the acquiring company with a
then market value equal to two times the exercise price.
62. Due to the prohibitive costs this Poison Pill imposes on an
Acquiring Person, no tender offer or exchange offer that would trigger the
Rights can practically be consummated unless Cyprus Amax's board redeems the
Rights or amends the Poison Pill. Cyprus Amax's board can redeem the Rights at a
redemption price of $0.01 per Right. In addition, Cyprus Amax's board can amend
the Rights Agreement, as it did on July 15, 1999 to accommodate the ASARCO
Cyprus Merger. Accordingly, simply by refusing to redeem the Rights or to amend
the Rights Agreement, Cyprus Amax's board can block offers regardless of the
interests of Cyprus Amax's shareholders. The triggering of the Poison Pill
would be particularly unjustified given the premium price and fair structure
proposed by Phelps Dodge.
63. The continued maintenance of the Poison Pill in relation to
Phelps Dodge serves only one purpose: entrenchment of the Director Defendants
for their own personal gain and at the expense of their duty to act in the best
interests of Cyprus Amax's shareholders. A failure by Cyprus Amax and the
Director Defendants to redeem the Rights or to amend the Rights Agreement would
be a breach of the Director Defendants' fiduciary duties, because such failure
will effectively hinder the shareholders of Cyprus Amax from exercising their
fundamen tal rights to determine the future of the company they own.
DECLARATORY RELIEF
------------------
22
64. ASARCO and Cyprus Amax's indicate public rejection of Phelps
Dodge's attempts to negotiate a business combination and their failure to take
necessary steps to place the matter before the shareholders of both companies
indicate that there is a substantial controversy between the parties. The
adverse legal interests of the parties are real and immediate.
65. The granting of the requested declaratory relief will serve the
public interest by affording relief from uncertainty and by avoiding delay as
well as conserving judicial resources by avoiding piecemeal litigation.
IRREPARABLE INJURY
------------------
66. Defendants' unwillingness to consider Phelps Dodge's proposed
three-way transaction will prevent Phelps Dodge's proposal from being placed
before the shareholders of both companies for their consideration. Should this
occur, the shareholders of ASARCO and Cyprus Amax, including Phelps Dodge, will
be deprived of the unique opportunity to decide which merger proposal is more
beneficial to them.
67. The terms of the Merger Agreement, by prohibiting the boards of
ASARCO and Cyprus Amax from considering and negotiating alternative proposals,
effectively prevent the boards from complying with their fiduciary duties to act
in the best interests of their companies.
23
68. In addition, Phelps Dodge, as a potential party to a three-way
transaction, will be deprived of the unique opportunity to enter into a business
combination that would provide it with substantial benefits, including increased
efficiency and international competitive ness.
69. The resulting injury to Phelps Dodge will not be compensable in
money damages and Plaintiffs, as well as other ASARCO and Cyprus Amax
shareholders, have no adequate remedy at law.
COUNT ONE
---------
Breach of Duty of Care by Defendants
------------------------------------
70. Plaintiffs repeat and reallege each and every allegation set
forth in paragraphs 1 through 69 as if fully set forth herein.
71. The Director Defendants owe a duty of care to plaintiffs. This
duty requires that they make good faith efforts to be informed and to exercise
appropriate judgment. Failure of a board of directors to inform itself fully of
all reasonably available material informa tion, including alternatives, before
arriving at a decision constitutes a breach of this duty.
72. The Director Defendants, in agreeing to and continuing to abide
by terms in the Merger Agreement that prevent them from fulfilling their
fiduciary duties, have breached their duty of care. By prohibiting themselves
from obtaining information or considering other potentially superior offers,
Defendants have precluded the possibility of making an informed recommendation
to shareholders of ASARCO and Cyprus Amax. Even though they claim that they are
willing to negotiate with Phelps Dodge, the unreasonable conditions in their
August 25
24
letter render any such willingness completely illusory. In addition, ASARCO and
Cyprus Amax have reaffirmed the onerous provisions of their Merger Agreement.
73. Plaintiffs seek: (i) a declaration that Ward and the Director
Defendants breached their duty to exercise due care in failing to make
reasonable efforts to obtain informa tion about the Phelps Dodge proposal; (ii)
a declaration that Ward and the Director Defendants breached their duty of care
in determining that the ASARCO Cyprus Merger was in the best interests of their
shareholders, without a reconfirmation of the fairness opinion of their
financial advisors; (iii) an injunction compelling Ward and the Director
Defendants to inform themselves adequately and to consider the Phelps Dodge
proposal; (iv) an injunction compelling Ward and the Director Defendants to
submit the Phelps Dodge Proposal to the shareholders of Cyprus Amax; and (v) an
injunction preventing Defendants from taking any further steps to proceed with
the proposed ASARCO Cyprus Merger.
COUNT TWO
---------
Breach of Fiduciary Duties by Ward and the Director Defendants
--------------------------------------------------------------
74. Plaintiffs repeat and reallege each and every allegation set
forth in paragraphs I through 73 as if fully set forth herein.
75. Ward and the Director Defendants stand in a fiduciary
relationship with Cyprus Amax shareholders, including Phelps Dodge. As
fiduciaries, they owe the highest duties of care, loyalty and good faith.
76. Three proposal for a three-way merger is non-coercive,
nondiscriminatory, and poses no threat to Cyprus Amax's corporate policies and
effectiveness. Phelps Dodge's
25
proposal represents a substantial premium over the current market price of
Cyprus Amax's stock and the value of the ASARCO non-premium alternative.
77. The failure of Ward and the Director Defendants to determine that
the proposed three-way merger is in the best interests of Cyprus Amax and its
shareholders -- or even to consider the question seriously -- constitutes a
violation of the fiduciary duties owed by them.
78. The failure of Ward and the Director Defendants even to assess
whether the proposed three-way merger is in the best interests of Cyprus Amax
and its shareholders is a violation of the fiduciary duties owed by them.
79. Plaintiffs seek: (i) a declaration that the failure of Ward and
the Director Defendants to consider the Phelps Dodge proposal and to determine
that the proposed three-way merger is in the best interests of Cyprus Amax's
shareholders is a breach of fiduciary duty; (ii) an injunction compelling Ward
and the Director Defendants to consider the Phelps Dodge proposal; (iii) an
injunction compelling Ward and the Director Defendants to submit the Phelps
Dodge proposal to the shareholders of Cyprus Amax; and (iv) an injunction
preventing Defendants from taking any further steps to proceed with the proposed
ASARCO Cyprus Merger.
80. Plaintiffs have no adequate remedy at law.
COUNT THREE
-----------
The $45 Million Termination Fee is Unenforceable
------------------------------------------------
81. Plaintiffs repeat and reallege each and every allegation set
forth in paragraphs 1 through 80 as if fully set forth herein.
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82. Ward and the Director Defendants stand in a fiduciary
relationship with Cyprus Amax shareholders, including Phelps Dodge. As
fiduciaries, they owe the highest duties of care, loyalty and good faith.
83. The Director Defendants breached their fiduciary duties in
agreeing to a Termination Fee in the grossly excessive sum of $45 million, and
in agreeing that such Termination Fee would apply even if the shareholders of
Cyprus Amax voted against the ASARCO Cyprus Merger.
84. Plaintiffs seek a declaration that agreeing to a Termination Fee
of $45 million is a breach of fiduciary duty.
85. Plaintiffs have no adequate remedy at law.
COUNT FOUR
The Coercive Vote Should Be Enjoined
------------------------------------
86. Plaintiffs repeat and reallege each and every allegation set
forth in paragraphs 1 through 85 as if fully set forth herein.
87. The scheduled September 30, 1999 vote by the Cyprus Amax
stockholders on the ASARCO Cyprus Merger will be improperly and illegally
coercive. Stockholders will be wrongfully coerced into voting in favor of the
merger because, as Defendants have structured the Merger Agreement, Cyprus Amax
will have to pay to ASARCO a grossly excessive Termination Fee if the Cyprus
Amax stockholders fail to approve the merger. The vote of the Cyprus Amax
stockholders will also be wrongfully coerced because they know that the ASARCO
Cyprus transaction is the only business combination the Director Defendants will
approve and thus, due
27
to the Director Defendants' breaches of fiduciary duties, is the only
transaction whereby Cyprus Amax can be consolidated with another entity.
88. Plaintiffs seek an injunction enjoining the September 30, 1999
vote, or, alternatively, enjoining Defendants from taking any actions to
consummate the ASARCO Cyprus Merger.
89. Plaintiffs have no adequate remedy at law.
COUNT FIVE
----------
Phelps Dodges' Proposal Must be Submitted to Shareholders of Cyprus Amax
------------------------------------------------------------------------
90. Plaintiffs repeat and reallege each and every allegation set
forth in paragraphs 1 through 99 as if fully set forth herein.
91. The proposal for a three-way merger is non-coercive,
nondiscriminatory, and poses no threat to Cyprus Amax's corporate policies and
effectiveness, and represents a substantial premium over the current market
price of Cyprus Amax's stock.
92. Ward and the Director Defendants may not improperly prevent the
shareholders of Cyprus Amax from considering the Phelps Dodge Proposal. Nor may
they improperly manipulate the voting process, as they already have attempted to
do. Any meeting of Cyprus Amax's shareholders to vote upon the ASARCO Cyprus
Merger must include a consider ation of the Phelps Dodge proposal, which is
superior and more beneficial to Cyprus Amax's shareholders than the ASARCO-
Cyprus Amax Merger Agreement. The failure of Ward and the Director Defendants
to put the Phelps Dodge proposal before the shareholders of Cyprus Amax is a
breach of their fiduciary duties.
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93. Plaintiffs seek: (i) a declaration that the failure of Ward and
the Director Defendants to submit the Phelps Dodge proposal for consideration by
Cyprus Amax's sharehold ers is a breach of fiduciary duty; (ii) an injunction
compelling Ward and the Director Defendants to submit the Phelps Dodge proposal
to Cyprus Amax's shareholders at any meeting of Cyprus Amax's shareholders to
consider the ASARCO Cyprus Merger; and (iii) an injunction preventing Ward and
the Director Defendants from taking any further steps to proceed with the
proposed ASARCO Cyprus Merger until Cyprus Amax's shareholders have been given
the opportunity to consider the three-way transaction proposed by Phelps Dodge.
94. Plaintiffs have no adequate remedy at law.
COUNT SIX
---------
Failure to Amend or Redeem the Poison Pill
------------------------------------------
95. Plaintiffs repeat and reallege each and every allegation set
forth in paragraphs 1 through 94 as if fully set forth herein.
96. The proposal for a three-way merger is non-coercive,
nondiscriminatory, and represents a substantial premium over the market price of
ASARCO and Cyprus Amax stock. The Phelps Dodge proposal posts no threat to
Cyprus Amax's corporate policies and effectiveness.
97. The failure of Ward and the Director Defendants to redeem the
Rights or to amend the Rights Agreement, or to otherwise make it inapplicable to
the Phelps Dodge proposal, is a severe and inappropriate response to the
proposed three-way merger. In addition, Ward and the Director Defendants'
failure to redeem the Rights or to amend the Rights Agree ment is a breach of
the fiduciary duties owed by them to Cyprus Amax's shareholders.
29
98. The application of the Rights Agreement, or the adoption of any
other defensive measures, to impede or preclude the consideration and/or
consummation of the three way merger proposed by Phelps Dodge is a violation of
the fiduciary duties owed by Ward and the Director Defendants. The Phelps Dodge
Exchange Offer is incapable of completion unless the Poison Pill is redeemed or
amended.
99. Plaintiffs seek: (i) a declaration that the failure of Ward and
the Director Defendants to redeem the Rights or to amend the Rights Agreement to
make it inapplicable to the Phelps Dodge proposal is a breach of fiduciary duty;
(ii) an injunction compelling Ward and the Director Defendants to redeem the
Rights or to otherwise amend the Rights Agreement to make it inapplicable to the
Phelps Dodge proposal; and (iii) an injunction enjoining Ward and the Director
Defendants from applying the Rights Agreement or adopting any other defensive
measures aimed at impeding the three-way merger proposed by Phelps Dodge.
100 Plaintiffs have no adequate remedy at law.
COUNT SEVEN
-----------
Breach of Fiduciary Duty: Section 203 of the Delaware General Corporation Law
------------------------------------------------------------------------------
101 Plaintiffs repeat and reallege each and every allegation set
forth in paragraphs 1 through 100 as if fully set forth herein.
102 Section 203 of the Delaware General Corporation Law, 8 DEL. C.
-------
(S) 203, entitled "Business Combinations with Interested Stockholers," applies
to any Delaware corpora tion that has not opted out of such statute's coverage.
103 Section 203 provides that, if a person acquires 15% or more of a
com pany's stock, such "interested stockholder" may not engage in a "business
combination" with the
30
company (which includes mergers or consolidations) for three years after the
person becomes an interested stockholder, unless: (i) prior to the 15%
acquisition, the board of directors has approved either the acquisition or the
business combination; (ii) the interested stockholder acquires 85% of the
corporation's voting stock in the transaction in which it crosses the 15%
threshold; or (iii) on or subsequent to the date of the 15% acquisition, the
business combination is approved by the board of directors and authorized at an
annual or special meeting of stock holders by the affirmative vote of at least
66-2/3% of the outstanding voting stock which is not owned by the interested
stockholder. Section 203 is intended to prevent coercive and inadequate tender
or exchange offers.
104 Cyprus Amax's board may not properly use Section 203 to prevent
Cyprus Amax's stockholders from considering Phelps Dodge's three-way merger
proposal, nor to prevent substantive negotiations between ASARCO, Cyprus Amax
and Phelps Dodge that could lead to a deal among the three companies. The true
purpose of Section 203, to allow a board of directors to ensure that its
shareholders receive the highest possible value for their shares, would be
thwarted. Defendants should not be permitted to use Section 203 to preclude
consideration of all possible alternatives to their preferred transaction or to
deny stockholders the right to vote on other offers.
105 According to Section 203, Defendants have the power to render the
section inapplicable to Phelps Dodge's proposal by approving the three-way
merger. The Defendants' failure to approve Phelps Dodge's proposal and to take
other steps necessary to render Section 203 inapplicable prevents Cyprus Amax's
shareholders from considering a combination that will
31
be more beneficial to them than the purported "merger of equals" between ASARCO
and Cyprus Amax. The Defendants are therefore in breach of their fiduciary
duties.
106 Plaintiffs seek: (i) a declaration that the application of
Section 203 to impede or frustrate the Phelps Dodge proposal is a breach of
fiduciary duty; and (ii) an injunction compelling Ward and the Director
Defendants to approve the Phelps Dodge proposal, thereby rendering Section 203
inapplicable.
107 Plaintiffs have no adequate remedy at law.
COUNT EIGHT
-----------
ASARCO's Aiding and Abetting of Defendants' Breaches
----------------------------------------------------
108 Plaintiffs repeat and reallege each and every allegation set
forth in paragraphs 1 through 107 as if fully set forth herein.
109 Defendants have breached their fiduciary duties to Cyprus Amax
and to its shareholders.
110 ASARCO has aided and abetted Defendants in the breach of their
fiduciary duties. As a direct participant in the purported "merger of equals,"
ASARCO knew of, and in fact actively encouraged and participated in, the breach
of fiduciary duties set forth herein. ASARCO and Cyprus Amax have entered into a
Merger Agreement which prohibits the consideration of other, even superior,
alternatives and provides ASARCO with an unjustifiably large Termination Fee.
ASARCO induced Defendants to breach their fiduciary duties in order to obtain
the substantial financial benefits that the ASARCO Cyprus Merger would provide,
at the expense of Cyprus Amax's stockholders.
32
111 Plaintiffs seek an injunction preventing ASARCO, its employees,
agents and all persons acting on its behalf, from aiding and abetting Ward and
the Director Defendants' breach of fiduciary duties to Cyprus Amax and its
shareholders, with respect to the ASARCO Cyprus Merger and the Phelps Dodge
proposal.
112 Plaintiffs have no adequate remedy at law.
WHEREFORE, Phelps Dodge respectfully requests that the Court enter an
order:
1. declaring that (i) the failure to make good faith efforts to
obtain information about reasonable alternatives such as the Phelps Dodge
proposal in order to make an informed decision about the ASARCO Cyprus Merger;
and (ii) the failure to obtain a reconfirma tion of the fairness opinion of
their financial advisors, is a breach of the Director Defendants' duty of care
which they owe to Cyprus Amax and its shareholders;
2. declaring that the failure to (i) adequately consider Phelps
Dodge's offer; (ii) determine that the Phelps Dodge proposal is in the best
interest of Cyprus Amax's shareholders; (iii) submit Phelps Dodge's proposed
three-way merger to the shareholders of Cyprus Amax; (iv) render inapplicable
the Poison Pill by redeeming the Rights or amending the Rights Agreement; and
(iv) render inapplicable Section 203 by approving the Phelps Dodge proposal,
constitute a breach of Ward and the Director Defendants' fiduciary duties;
3. compelling Ward and the Director Defendants to render
inapplica ble to the Phelps Dodge proposal the Poison Pill by redeeming the
Rights or amending the Rights Agreement;
33
4. compelling Ward and the Director Defendants to render
Section 203 inapplicable to the three-way merger proposed by Phelps Dodge by
approving the Phelps Dodge proposal;
5. compelling Defendants to consider the Phelps Dodge proposal
and to take all steps necessary to provide Plaintiffs with a fair and equal
opportunity to enter into a transaction with ASARCO and Cyprus Amax, including
submitting the proposal to Cyprus Amax's shareholders;
6. temporarily, preliminarily and permanently enjoining
Defendants from taking any further steps to proceed with the proposed ASARCO
Cyprus Merger until the shareholders of Cyprus Amax have been given the
opportunity to consider the three-way transaction proposed by Phelps Dodge;
7. temporarily, preliminarily and permanently enjoining the
adoption or exercise of any measures by Cyprus Amax or Ward and the Director
Defendants which have the effect of impeding, frustrating or interfering with
the Phelps Dodge proposal;
8. temporarily, preliminarily and permanently enjoining ASARCO,
its employees, agents and all persons acting on its behalf, from aiding and
abetting Ward and the Director Defendants' breach of their fiduciary duties to
Cyprus Amax's stockholders;
9. granting damages for all incidental injuries suffered as a
result of Defendants' unlawful conduct;
10. awarding Phelps Dodge its costs and expenses in this action,
including reasonable attorneys' fees; and
34
11. granting such other and further relief as the Court deems
just and proper.
Dated: Wilmington, Delaware
August 27, 1999
--------------------------------------
R. Franklin Balotti
Gregory P. Williams
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
(302) 658-6541
Attorneys for Plaintiffs
Of Counsel:
Stuart J. Baskin
Alan S. Goudiss
SHEARMAN & STERLING
599 Lexington Avenue
New York, New York 10022
(212) 848-4000
John Hall
DEBEVOISE & PLIMPTON
875 Third Avenue
New York, New York 10022
(212) 909-6000
35