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STATE OF MAINE
CUMBERLAND, ss SUPERIOR COURT
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BRUNSWICK TECHNOLOGIES, INC., )
)
Plaintiff, )
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v. ) CIVIL ACTION NO.
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VETROTEX CERTAINTEED CORPORATION )
d/b/a VETROTEX AMERICA, )
)
Defendant. )
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COMPLAINT
INTRODUCTION
1. This case arises in the context of a hostile takeover attempt by the
defendant and its affiliates, all of which are directly or indirectly controlled
by Companie de Saint-Gobain, a French corporation, to take control of the
plaintiff Brunswick Technologies, Inc. ("BTI"), a Maine corporation whose shares
are publicly traded on the National Association of Securities Dealer Automatic
Quotation market. On April 17, 2000, Vetrotex CertainTeed Corporation
("Vetrotex"), as a BTI shareholder holding more than 10% of BTI's shares,
demanded a special meeting of BTI shareholders ("Special Meeting"), which
proposed resolutions which purported (i) to amend the Articles of Incorporation
of BTI, and (ii) to remove the entire board of directors of BTI. On May 2, 2000,
BTI sent out the notice of Special Meeting to take place on June 16, 2000, which
included both matters included in the Vetrotex demand. On May 16, 2000, BTI
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held its regularly scheduled annual meeting ("Annual Meeting"), at which time a
new Board of Directors was elected.
2. BTI now seeks a declaratory judgment that declares: (i) the proposed
Special Meeting is now moot because the purpose for the Special Meeting no
longer exists or has been superceded by the recent election at the Annual
Meeting, (ii) the proposed amendment to the BTI Articles of Incorporation is
void and of no effect because it is legally ineffective and structurally
meaningless, thereby rendering any vote on such proposed amendment unnecessary
and moot, and (iii) Vetrotex's failure to identify the new directors it proposes
fails to comply with BTI's bylaws and renders any removal vote ineffective.
JURISDICTION AND VENUE
3. Jurisdiction is proper in this Court pursuant to Title 4 M.R.S.A.
section 105.
4. Venue in this Court is proper pursuant to Title 14 M.R.S.A. section
501.
PARTIES
5. The plaintiff, Brunswick Technologies, Inc. ("BTI") is a corporation
organized under the laws of the State of Maine and having a principal place of
business at 43 Bibber Parkway, Brunswick, Maine.
6. Defendant Vetrotex CertainTeed Corporation d/b/a Vetrotex America
("Vetrotex") is a corporation organized under the laws of the State of Delaware
and having a principal place of business at 4515 Allendale Road, Wichita Falls,
Texas.
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FACTS
7. Brunswick Technologies, Inc. ("BTI") is a technologically advanced,
leading developer of engineered reinforcement "knit" fiberglass fabrics used in
the fabrication of composite materials. BTI is a publicly held company with
shares of Common Stock (trading symbol: BTIC) quoted and traded on the NASDAQ
National Market System since February 5, 1997.
8. BTI uses technologically advanced stitchbonding equipment and
processes to prepare glass, carbon and other high modulus fibers for combination
with resin to produce laminates used in the construction of such diverse items
as boats, skis, diving boards, protective helmets and ballistic armor
applications, car and truck parts, industrial tanks and pipes, undersea oil
wellhead and pipeline protection covers and offshore oil platform modules.
9. BTI's sales for 1999 were approximately $45 million. BTI is one of
three major participants in the North American knit fiberglass market accounting
for approximately 50% of sales.
10. By letter dated April 17, 2000, BTI was advised by Vetrotex's counsel
that Vetrotex had directed the incorporation on April 14, 2000 of VA Acquisition
Corporation in Maine. This letter also indicated that Vetrotex was exercising
its rights under the Maine Business Corporation Act to call a special meeting. A
true and accurate copy is attached hereto as Exhibit 1.
11. Also on April 17, 2000, BTI received Vetrotex' demand for the Special
Meeting by facsimile with the original being "overnighted" to BTI. A true and
accurate copy is attached hereto as Exhibit 2.
12. The bylaws of BTI, Article II, section 2 (Special Meetings) states:
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Special meetings of the shareholders, for any purpose or purposes, unless
otherwise prescribed by statute, may only be called by the President, the
Chairman of the Board of Directors, a majority of the Board of Directors,
or the holders of not less than 10% of the stock entitled to vote at the
meeting[.] At a special meeting of shareholders, only such business shall
be conducted, and only such proposals shall be acted upon, as shall have
been stated in the written notice of the special meeting and otherwise
properly brought before the special meeting.
A true and accurate copy of BTI's bylaws is attached hereto as Exhibit 3.
13. According to the request of Vetrotex, the first matter to be addressed
at the Special Meeting was a proposed resolution ("First Resolution"), drafted
by Vetrotex, that stated as follows:
RESOLVED: That the Articles of Incorporation of the Corporation are
hereby amended to provide that, at a special meeting of directors called
expressly for that purpose, the entire board of directors or any individual
directors may be removed from the board, with or without cause, by the
affirmative vote of a majority of the outstanding shares entitled to vote
for directors; and that the appropriate officers of the Corporation shall
promptly file Articles of Amendment with the Maine Secretary of State
setting forth the foregoing amendment.
See Exhibits 1 and 2 (emphasis added).
14. The second proposal ("Second Resolution") submitted by Vetrotex was as
follows:
RESOLVED: That the entire board of directors of the Corporation is
hereby removed, effective immediately.
Id.
15. Vetrotex also indicated that if the resolution removing the directors
was approved, it planned to propose a slate of directors to be elected at the
meeting to fill the resulting vacancies. Vetrotex did not, however, identify
those proposed new directors in any way.
16. On April 20, 2000, Vetrotex or its affiliates filed with the
Securities and Exchange Commission a Tender Offer Statement and Schedules
("Tender Offer Statement")
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announcing an offer to purchase all of the remaining outstanding shares of BTI
at $8.00 per share in cash pursuant to the April 20, 2000 Offer to Purchase and
Letter of Transmittal, which were appended to the Tender Offer Statement and
Schedules. According to the Tender Offer Statement, the offer is conditioned on,
among other things, the valid tender of shares which together with the 14%
already owned by Vetrotex would give Vetrotex and or its affiliates a majority
of the outstanding shares. The Tender Offer Statement provided that the offer
and withdrawal rights expire at 12:00 midnight E.S.T. on May 17, 2000, unless
the offer is extended. Vetrotex has since extended the tender offer, until June
16, 2000.
17. On May 2, 2000, pursuant to this request, BTI sent out a notice of
Special Meeting ("Notice of Special Meeting") to be held on June 16, 2000. As
required, BTI reproduced verbatim the two resolutions proposed by Vetrotex that
would constitute the only business conducted at that meeting. A record date of
May 2, 2000, was established for the Special Meeting. A true and accurate copy
is attached hereto as Exhibit 4.
18. On several occasions since the Notice of Special Meeting went out to
BTI shareholders, Vetrotex has filed documents reproducing the language of its
resolutions verbatim. In a recent filing with the SEC, Vetrotex has now asserted
that it will seek a vote on a substantially different resolution. A true and
accurate copy of such filing is attached hereto as Exhibit 5. Vetrotex has
implicitly admitted that this different proposal has a different force and
effect than the proposal it submitted and which was sent out to all BTI
shareholders as Vetrotex had demanded.
19. On May 16, 2000, BTI held its regularly scheduled Annual Meeting at
the Marriott at Sable Oaks, South Portland, Maine. A quorum of shareholders was
present to conduct business. A representative of Vetrotex and its counsel were
present at the Annual
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Meeting. One of the matters properly before the Annual Meeting was the election
of a new Board of Directors. A true and accurate copy is attached hereto as
Exhibit 6. In fact, a new Board of Directors was elected, replacing the Board
holding office at the time of the Notice of Special Meeting. During the course
of that election, neither Vetrotex nor its counsel made any objection to the
election nor spoke. On information and belief, Vetrotex cast a ballot concerning
the election of the new Board of Directors. The composition of the new Board of
Directors differed from the Board holding office at the time of the Notice of
Special Meeting.
COUNT I - DECLARATORY JUDGMENT
20. BTI repeats and realleges the allegations made in the foregoing
paragraphs.
21. The Board of Directors of BTI in office at the time of the Notice of
Special Meeting no longer exists. As of the Annual Meeting, the terms of office
of the Board of Directors of BTI in office at the time of the Notice of Special
Meeting expired. As described above, BTI shareholders elected at the Annual
Meeting a successor Board that took office as of May 16, 2000.
22. The May 16, 2000 election of a new Board of Directors has rendered
moot the purpose for holding the Special Meeting. It is a needless expense and
diversion of BTI resources to conduct the Special Meeting.
23. Vetrotex intends to proceed with the Special Meeting. Vetrotex is in
the process of soliciting proxies for the Special Meeting. A true and accurate
copy is attached hereto as Exhibit 7.
24. There is an actual controversy concerning the validity of the Special
Meeting.
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COUNT II - DECLARATORY JUDGMENT
25. BTI repeats and realleges the allegations made in the foregoing
paragraphs.
26. The only matters that may be presented at the Special Meeting are
those specified in the Notice of Special Meeting, as requested by Vetrotex.
27. The Notice of Special Meeting has been distributed to BTI
shareholders. Some of these shareholders have relied on the wording of
Vetrotex's proposed resolutions.
28. As worded, the First Resolution is incomprehensible and unworkable.
Vetrotex called for a special meeting of directors to remove the entire board of
directors. See Exhibits 1 and 2. As required, BTI reproduced the First
Resolution verbatim as proposed by Vetrotex. See Exhibit 4. Under BTI bylaws,
only directors -not shareholders- can call for a special meeting of directors.
See Exhibit 3 (Article III, Section 5). In addition, only the shareholders -not
directors- can remove and replace the board of directors. See Exhibit 3 (Article
III). Although BTI shareholders may call a special meeting of shareholders (see
Exhibit 3 (Article II, section 2)), it makes no sense that the shareholders can
call a special meeting of directors in which shareholder participation is
precluded. As such, the First Resolution is a nullity. Vetrotex acknowledged the
defect and has subsequently indicated an intent to present a substantively
different proposal at that the Special Meeting which was not specified in its
request nor was it specified in the Notice of Special Meeting. See Exhibit 5
(page 8 of 19).
29. It is a waste of resources to convene a Special Meeting to vote on a
resolution that has no legal effect. It is unfair and prejudicial to the
shareholders of BTI to submit to such a proposal or to seek to act on it.
30. Vetrotex has taken the position that if the resolution stated in the
Notice of Special Meeting passes, the BTI Board of Directors may be removed by a
majority vote of the
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shareholders. In fact, even if the resolution passes, a two-thirds vote will
still be required. As a result, there is substantial uncertainty and confusion
concerning the effect of this resolution. Vetrotex has also taken the position
that it may amend the resolution set forth in the Notice of Special Meeting by
"procedural" vote even though the amended resolution was not specified in the
Notice of Special Meeting.
31. There is an actual controversy concerning the effect of the
resolution.
COUNT III - DECLARATORY JUDGMENT
32. BTI repeats and realleges the allegations made in the foregoing
paragraphs.
33. According to the BTI bylaws, only matters that are specified in the
Notice of Special Meeting may be brought up at the Special Meeting. See Exhibit
3. This requirement is not inconsistent with 13-A M.R.S.A.ss.707 because it does
not change the statutory requirements; it simply adds information for complete
disclosure to BTI shareholders and the investing public.
34. In order for a matter to be specified within the meaning of the BTI
bylaws, it must contain sufficient detail to inform the shareholders of the
nature of the matter to determine their interest and position in attending the
meeting or voting by proxy.
35. Because of the procedures specified in the BTI bylaws, matters not
sufficiently specified in the Notice of Special Meeting may not be later amended
by other documents.
36. In its request for a Special Meeting, Vetrotex did not identify a
single director it intended to nominate to replace the directors it sought to
remove. As of the date of this Complaint, more than two weeks after the original
notice and less than one month before the Special Meeting, Vetrotex has still
not formally designated its slate of proposed directors. Based
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on preliminary filings with the SEC, Vetrotex has indicated that it may propose
a group of directors all of whom are employees of Saint Gobain Corporation, not
one of whom is independent. Neither BTI nor its shareholders have yet been
publicly or formally notified of this slate of Saint Gobain insiders. As a
result, the Notice of Special Meeting could not inform stockholders of such
identity. Thus, the stockholders have no basis to evaluate their qualifications,
whether they would be superior directors to the directors Vetrotex sought to
remove, or make any other meaningful judgment concerning this subject. In
essence, Vetrotex has conducted a classic "bait and switch" technique to conceal
its true intentions.
37. In light of the lack of specificity of its proposal to elect new
directors, the proposal is not properly before the Special Meeting.
38. A corporation cannot function without a Board of Directors. Directors
cannot be removed until successors are properly elected and qualified into
office. Because the proposal to elect new directors is not properly before the
Special Meeting, there is no mechanism to qualify new directors in the event
Vetrotex's proposal to remove directors succeeds. Accordingly, that proposal is
also rendered moot and ineffective.
39. There is an actual controversy concerning the effect of the
resolution.
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WHEREFORE, the plaintiff Brunswick Technologies, Inc. respectfully asks
this Court to:
(A) declare that the Annual Meeting moots or supercedes Vetrotex's
proposal to remove the BTI Board of Directors;
(B) declare that Vetrotex's proposal to amend the BTI Articles of
Incorporation is null and void and of no effect;
(C) declare that Vetrotex's undefined proposal to elect new directors is
not properly before the Special Meeting and that, as a result, any
proposal to remove directors at this Special Meeting is void and of no
effect; and
(D) award BTI such other and further relief as this Court deems just and
proper.
Respectfully submitted,
BRUNSWICK TECHNOLOGIES, INC.
By its attorneys,
/s/ Stephen G. Morrell for Evan Slavitt
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Evan Slavitt (MA BBO No. 466510)
Gadsby Hannah, LLP
225 Franklin Street
Boston, Massachusetts 02110-2811
(617)345-7000
/s/ Stephen G. Morrell
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Stephen G. Morrell,
Maine State Bar No. 792
Eaton Peabody, Bradford & Veague, P.A.
167 Park Row
P.O. Box 9
Brunswick, Maine 04011
(207) 729-1144
DATED: May 23, 2000
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