Exhibit (a)(5)(A)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MSC ACQUISITION CORP., )
)
Plaintiff, )
)
v. ) C.A. No. ___________
)
MAXWELL SHOE COMPANY INC.,)
)
Defendant, )
)
COMPLAINT
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Plaintiff MSC Acquisition Corp. ("MSCAC" or "Plaintiff") by and
through its undersigned attorneys, alleges for its Complaint as follows:
NATURE OF THIS ACTION
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1. This is an action brought pursuant to Section 220 of the
Delaware General Corporation Law, 8 Del. C. {section} 220 ("Section 220"), to
compel defendant Maxwell Shoe Company Inc. ("Maxwell" or the "Company") to make
available for inspection and copying by Plaintiff certain books and records of
the Company, as more fully described herein.
THE PARTIES
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2. Plaintiff MSCAC is the record owner of 50 shares of Maxwell
common stock and has been the record owner of such shares at all times relevant
hereto. MSCAC is an indirect wholly-owned subsidiary of Jones Apparel Group,
Inc. ("Jones Apparel"). MSCAC was organized in 2004 under the laws of the
State of New York in order to facilitate Jones Apparel's efforts to acquire all
of the outstanding shares of Maxwell. MSCAC has not engaged, and is not
expected to engage, in any business other than in connection with Jones
Apparel's efforts to acquire Maxwell.
3. Defendant Maxwell is a Delaware corporation with its
principal place of business in Hyde Park (Boston), Massachusetts.
BACKGROUND
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JONES APPAREL'S PROPOSAL TO ACQUIRE MAXWELL
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4. On February 25, 2004, Jones Apparel announced that it had
delivered a proposal to Maxwell to acquire all of the outstanding shares of
Maxwell at a price of $20.00 per share in cash (the "Jones Apparel Proposal").
The $20.00 per share cash price proposed by Jones Apparel represented a premium
of 13.7% to the last reported sales price per Maxwell share on the Nasdaq
National Market System on February 18, 2004. All subsequent attempts by Jones
Apparel to negotiate with Maxwell concerning the Jones Apparel Proposal were
rebuffed.
5. On March 12, 2004, Maxwell issued a press release and
delivered a letter to Jones Apparel indicating that Maxwell's Board of
Directors unanimously had determined to reject the Jones Apparel Proposal and
to refuse to meet with Jones Apparel to discuss that proposal.
6. On March 23, 2004, MSCAC commenced a tender offer (the
"Offer") to acquire all the outstanding shares of Maxwell's Class A Common
Stock (including the associated rights to purchase shares of Series A Junior
Participating Preferred Stock of Maxwell) at a price of $20.00 per share in
cash. The Offer currently is scheduled to expire at 12:00 Midnight, eastern
standard time, on Monday, April 19, 2004, unless extended.
7. Also on March 23, 2004, Jones Apparel and MSCAC filed a
preliminary consent solicitation statement with the U.S. Securities and
Exchange Commission ("SEC"). As
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that preliminary consent solicitation statement indicates, Jones Apparel and
MSCAC are considering proposing the removal of the members of Maxwell's new
Board of Directors elected at Maxwell's 2004 annual stockholders' meeting to
be held on April 8, 2004. That proposal has not yet been made by Jones Apparel
or MSCAC, however, and Jones Apparel and MSCAC have not commenced a
solicitation of Maxwell's stockholders with respect to that proposal.
Moreover, that proposal will not be made, or any consent solicitation of
Maxwell's stockholders commenced, if at all, until after Maxwell's new Board
of Directors has been elected on April 8, 2004, and Jones Apparel and MSCAC
have received the SEC's clearance to distribute the consent solicitation
materials to Maxwell's stockholders.[1]
8. Despite the fact that no proposal has been made and no
solicitation of Maxwell stockholders commenced by Jones Apparel and MSCAC,
Maxwell announced on March 25, 2004, that its Board of Directors had "set a
record date of March 25, 2004 in connection with Jones Apparel Group, Inc.'s
consent solicitation". The decision by Maxwell's Board of Directors to set a
record date for a consent solicitation that has not even commenced appears to
be a clear violation of Maxwell's Amended and Restated Certificate of
Incorporation ("Certificate of Incorporation") and of Delaware law.
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[1] In addition, on March 23, 2004, MSCAC executed a written demand, verified
under oath (the "Stocklist Demand Letter"), that was delivered by hand to
Maxwell's principal place of business in Hyde Park (Boston), Massachusetts,
and also to The Corporation Service Company, Maxwell's registered agent in
Delaware, later that same day. In the Stocklist Demand Letter, MSCAC demanded
the right, pursuant to Section 220, to inspect and make copies of a list of
Maxwell's stockholders and certain ancillary records. The Stocklist Demand
Letter stated that MSCAC requested such information for the purpose of
enabling MSCAC "(i) to communicate with other stockholders of the Company in
connection with the tender offer by MSCAC to purchase all outstanding shares
of Common Stock of the Company and (ii) to permit MSCAC and [Jones Apparel] to
solicit consent from Company stockholders on matters described in the
preliminary consent statement filed by MSCAC and Jones Apparel with the SEC".
To date, MSCAC has not received a response from Maxwell to the Stocklist
Demand Letter.
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9. Pursuant to Article VII of Maxwell's Certificate of
Incorporation:
[t]he record date with respect to the
determination of stockholders entitled to consent
in writing to any action SHALL BE the first date
on which a signed written consent setting forth
the action to be taken or proposed to be taken is
delivered to the Corporation by delivery to its
registered office in Delaware, its principal
place of business, or an officer or agent of the
Corporation having custody of the books in which
proceedings of meetings of stockholders are
recorded.
(emphasis added). Accordingly, in order for Maxwell's Board of Directors to
have properly set March 25, 2004, as a record date, a Maxwell stockholder must
have delivered "a signed written consent" to the Company or its registered
agent on March 25, 2004, purportedly "in connection with Jones Apparel Group,
Inc.'s consent solicitation".
10. Maxwell's press release announcing the setting of the March
25, 2004, record date is silent as to whether the Company did in fact receive
"a signed written [stockholder] consent". If the Company did not receive such
a consent, then the Board's setting of the record date clearly contravened
Article VII of Maxwell's Certificate of Incorporation.
11. Even if the Company did receive such a consent, however, that
consent is necessarily invalid and void because no proposal has yet been made
and no consent solicitation has yet been commenced by Jones Apparel and MSCAC.
As a result, any "signed written [stockholder] consent" submitted to Maxwell in
connection with the setting of the record date on March 25, 2004, must have
been prepared and solicited by someone other than Jones Apparel or MSCAC.
12. The question of whether a consent was in fact delivered to
Maxwell "in connection with Jones Apparel Group, Inc.'s consent solicitation"
is significant in terms of Jones Apparel's and MSCAC's strategic planning.
Under Delaware law, a consent solicitation must be
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completed within 60 days of the earliest-dated consent delivered to a company.
Accordingly, although such a position would be without merit, Maxwell may be
taking the position that the 60-day clock has begun to run. Thus, Jones
Apparel and MSCAC have a legitimate interest in knowing immediately whether
(a) a valid "signed written consent" was in fact delivered to the Company or
its registered agent on March 25, 2004, "in connection with [Jones Apparel's]
consent solicitation"; (b) whether the Maxwell Board acted properly in setting
the March 25, 2004, record date; and (c) whether Maxwell is taking the
position that the 60-day period for consideration by Maxwell's stockholders of
any possible future consent solicitation by Jones Apparel and MSCAC has
started to run.
MSCAC'S DEMAND TO INSPECT MAXWELL'S BOOKS AND RECORDS
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13. On March 26, 2004, MSCAC delivered by facsimile to Maxwell's
principal place of business and to its counsel, Gibson, Dunn & Crutcher LLP
(Markus Nauheim, Esq.), a written demand to inspect and copy certain books and
records of Maxwell pursuant to Section 220 (the "Demand Letter"). The Demand
Letter was signed under oath by Ira M. Dansky, the Secretary of MSCAC. A copy
of the Demand Letter was also sent that same day by facsimile to The
Corporation Service Company, Maxwell's registered agent in Delaware. The
Demand Letter was further delivered by hand to The Corporation Service Company
and to Gibson, Dunn & Crutcher LLP on March 29, 2004. A true and correct copy
of the Demand Letter is attached hereto as Exhibit A.
14. In the Demand Letter, MSCAC demanded the right immediately to
inspect the following books and records of the Company and to make copies or
abstracts therefrom:
(a) All documents, in draft or final form, on
paper or stored electronically (including, but
not limited to, notes, memorandum,
correspondence, e-mail, presentations, the
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minutes or resolutions of the Company's Board or
any committee thereof, and any written consents
executed by directors or members of any Board
committees), in any way relating to the decision
of the Company's Board of Directors to set a
record date of March 25, 2004, in connection with
a possible consent solicitation by MSCAC and
Jones Apparel Group, Inc. (together, "Jones
Apparel");
(b) Any consent of a stockholder of the Company
that was delivered to the Company in accordance
with Section 228 of the General Corporation Law
of the State of Delaware in connection with a
possible consent solicitation by Jones Apparel;
and
(c) All documents, in draft or final form, on
paper or stored electronically (including, but
not limited to, notes, memoranda, correspondence,
e-mail, presentations, the minutes or resolutions
of the Company's Board or any committee thereof,
and any written consents executed by directors or
members of any Board committees), in any way
relating to any consent referred to in paragraph
(b) above.
15. MSCAC's purpose for requesting these books and records, as
stated in the Demand Letter, is "(i) to more fully understand the facts and
circumstances underlying the decision of the Company's Board of Directors to
set a record date of March 25, 2004, in connection with a possible consent
solicitation by Jones Apparel, as disclosed by the Company in its press release
dated March 25, 2004, and underlying the delivery of any stockholder consent in
connection with such possible consent solicitation; and (ii) to investigate
potential or possible wrongdoing by the Board of Directors of the Company . . .
in connection with setting such record date or in connection with the
solicitation, execution or delivery of any such stockholder consent".
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16. Plaintiff has complied with all of the provisions of Section
220 with respect to the form and manner of making the above demand for
inspection and copying of the demanded materials.
17. Also on March 26, 2004, counsel for MSCAC contacted Maxwell's
counsel to request information on how the Maxwell Board set the March 25, 2004,
record date, and to ask specifically whether a "signed written consent" had
been delivered to the Company or its registered agent. Maxwell's counsel, Mr.
Nauheim, stated that he personally was not in possession of the relevant facts
but that he would ensure that another attorney at his firm reported back to
MSCAC's counsel with that information. As of the filing of this Complaint,
neither MSCAC nor its counsel have received any response to that inquiry, even
though Mr. Nauheim was given both office and home telephone numbers for counsel
for MSCAC.
MAXWELL REJECTS MSCAC'S DEMAND LETTER
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18. By letter dated March 28, 2004, counsel for Maxwell (Gibson,
Dunn & Crutcher LLP) informed counsel for MSCAC that Maxwell had "concluded
that MSCAC is not entitled to inspect the Company's books and records for the
purposes and in the manner set forth in Mr. Dansky's letter. Consequently,
please be advised that the Company will not provide the requested information."
A true and correct copy of this letter is attached hereto as Exhibit B.
19. Maxwell has no legitimate basis for refusing to permit MSCAC
to inspect the demanded materials. Therefore, MSCAC is entitled, pursuant to
Section 220, to inspect and make copies of all demanded materials.
WHEREFORE, Plaintiff prays that the Court, pursuant to Section 220:
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(a) Summarily order Maxwell to permit Plaintiff to inspect and
copy all of the demanded materials, or, alternatively, order Maxwell
immediately to furnish Plaintiff with copies of all the demanded materials;
(b) Summarily order Maxwell to provide Plaintiff with updated
demanded materials as they become available; and
(c) Grant such other proper relief, including reasonable
attorneys' fees and costs, as the Court may deem just and proper.
/s/ Brock E. Czeschin
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Jesse A. Finkelstein (#1090)
Raymond J. DiCamillo (#3188)
Brock E. Czeschin (#3938)
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
(302) 651-7700
Attorneys for Plaintiff
Of Counsel:
Paul C. Saunders
Timothy G. Cameron
CRAVATH, SWAINE & MOORE LLP
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Dated: March 30, 2004
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