EXHIBIT 99.3(b)
IN THE COURT CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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:
HARBOR FINANCE PARTNERS, :
:
Plaintiff, :
:
- against - :
: C.A. No. 15923-NC
PETER R. BARTON, HERBERT P. :
WILKINS, SR., ROBERT L. JOHNSON, :
JOHN C. MALONE, DENZEL WASHINGTON, :
DELANO E. LEWIS, SHEILA CRUMP :
JOHNSON, and BET HOLDINGS, INC., :
:
Defendants. :
:
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CLASS ACTION COMPLAINT
Plaintiff, for its complaint against defendants,
alleges upon information and belief, except as to paragraph 2
which is alleged upon knowledge, as follows:
NATURE OF THE ACTION
1. Plaintiff brings this action individually and as a
class action on behalf of all persons, other than defendants, who
own Class A Common Stock of BET Holdings, Inc. ("BET" or the
"Company") and who are similarly situated, for injunctive and
other appropriate relief in connection with a proposal by an
investor group which includes Robert L. Johnson ("Johnson"), its
Chairman and Chief Executive Officer, and Liberty Media Corp.
("Liberty"). Johnson and Liberty together control a majority of
BET's outstanding voting power. The investor group proposes to
acquire all of the issued and outstanding shares of BET Class A
Common Stock, which they do not own. Alternatively, in the event
that the transaction is consummated, plaintiff seeks to recover
rescissory and/or compensatory damages caused by the breach of
fiduciary duties owed by defendants to BET's minority public
shareholders.
PARTIES
2. Plaintiff is and has been a continuous owner of
shares of BET Class A Common Stock at all relevant times
described herein.
3. BET is a corporation duly organized and existing
under the laws of the State of Delaware, with its principal
offices located at One BET Plaza, 1900 W. Place NE, Washington,
D.C. As of October 28, 1996, the Company had approximately
10,125,000 shares of Class A Common Stock outstanding. The
officers and directors of BET own approximately 22% of its Class
A Common Stock. In addition, Johnson owns 100% of BET's Class C
Common Stock and a wholly-owned subsidiary of Liberty owns 100%
of BET's Class B Common Stock. BET owns and operates Black
Entertainment Television, a national network that broadcasts over
cable television.
4. Defendant Liberty is a corporation duly organized
and existing under the laws of the State of Delaware. Liberty
controls 100% of the Company's outstanding Class B Common Stock,
and approximately 18% of its Class A Common Stock, through direct
or indirect wholly owned subsidiaries.
5. Defendant Johnson at all times material hereto has
been the Company's Chairman of the Board and Chief Executive
Officer. Johnson beneficially owns approximately 22% of the
outstanding Class A Common Stock and 100% of the Class C Common
Stock of the Company.
6. Defendant Peter R. Barton ("Barton") at all times
material hereto has been a director of the Company and President
and a director of Liberty. Barton beneficially owns 5,000 shares
of BET's Class A Common Stock.
7. Defendant Herbert P. Wilkins, Sr. ("Wilkins") at
all times material hereto has been a director of BET.
8. Defendant John C. Malone ("Malone") at all times
material hereto has been a director of the Company and Chairman
and a director of Liberty.
9. Defendant Denzel Washington ("Washington") at all
times material hereto has been a director of the Company.
10. Defendant Delano E. Lewis ("Lewis") at all times
material hereto has been a director of the Company.
11. Defendant Sheila Crump Johnson ("Sheila Johnson")
at all times material hereto has been a director of the Company.
She is Johnson's wife.
12. The holders of the Company's Class A Common Stock
elected two of the members of BET's current Board and the holders
of the Class B and C Common Stock, voting together as a single
class, elected five directors. Therefore, the owners of the Class
B and C Common Stock, Johnson and Liberty, control the Company
and its Board.
13. The defendants, by reason of their corporate
directorships and/or executive positions, and as controlling
shareholders in the case of Liberty and Johnson, are fiduciaries
to and for the Company's minority shareholders, which fiduciary
relationship requires them to act with entire fairness and the
utmost good faith in dealing with BET's minority shareholders.
CLASS ACTION ALLEGATIONS
14. Plaintiff brings this action individually on its
own behalf and as a class action, on behalf of all stockholders
of the Company (except the defendants herein and any person,
firm, trust, corporation, or other entity related to or
affiliated with any of the defendants) and their successors in
interest, who are or will be threatened with injury arising from
defendants' actions as more fully described herein (the "Class").
15. This action is properly maintainable as a class
action because:
(a) the Class is so numerous that joinder of all
members is impracticable. There are hundreds of shareholders who
hold the approximately 10,125,000 shares of BET Class A Common
Stock outstanding;
(b) there are questions of law and fact which are
common to the Class including, inter alia, the following:
i) whether the proposed transaction is
grossly unfair to the public stockholders of BET;
ii) whether defendants have breached their
fiduciary and other common law duties owned by them to plaintiff
and the members of the Class; and
iii) whether plaintiff and the other members
of the Class would be irreparably damaged were the transaction
complained of herein consummated;
(c) plaintiff is a member of the Class and is
committed to prosecuting this action. Plaintiff has retained
competent counsel experienced in litigation of this nature. The
claims of plaintiff are typical of the claims of other members of
the Class, and plaintiff has the same interests as the other
members of the Class. Plaintiff does not have interests
antagonistic to or in conflict with those he seeks to represent.
Plaintiff is an adequate representative of the Class;
(d) the prosecution of separate actions by
individual members of the Class would create the risk of
inconsistent or varying adjudications with respect to individual
members of the Class which would establish incompatible standards
of conduct for defendants, or adjudications with respect to
individual members of the Class which would as a practical matter
be dispositive of the interests of the other members not parties
to the adjudications or substantially impair or impede their
ability to protect their interests; and
(e) the defendants have acted, or refused to act,
on grounds generally applicable to, and causing injury to, the
Class and, therefore, preliminary and final injunctive relief on
behalf of the Class as a whole is appropriate.
SUBSTANTIVE ALLEGATIONS
16. On or about September 11,1997, Liberty and Johnson
(the "Buyout Group"), offered to acquire the Company's
outstanding shares of Class A Common Stock, which they do not
already own, for $48 per share in cash (the "Buyout
Transaction").
17. The purpose of the Buyout Transaction is to enable
the Buyout Group to acquire one hundred percent (100%) equity
ownership of BET and its valuable assets for their own benefit at
the expense of BET's public stockholders who will be deprived of
their equity investment and the benefits thereof including, among
other things, the expected growth in the Company's profitability.
18. The Buyout Transaction is the product of unfair
dealing, and the price to be paid to Class members is unfair and
inadequate because, among other things.
(a) The announcement of the proposed Buyout
Transaction was made when the Company is posed for significant
future growth and earnings. Indeed, on June 11, 1997, the Company
reported earnings per share of $.36 for the third quarter of its
fiscal year ending July 31, 1997, compared with earnings per
share of $.30 for the third quarter of its fiscal year ended July
31, 1996, an increase of 20%. For the nine months ended April 30,
1997, earnings per share were $1.09, compared with earnings per
share of $.89 for the nine months ended April 30, 1996, an
increase of 22 percent.
Commenting on the quarterly results, Johnson stated:
"We are pleased with the outstanding operating results
reported by our core business, BET Cable Network. During
the quarter, BET continued to prove its compelling appeal as
it attracted 2.2 million new subscribers, including
subscribers to Direct TV, which ensures BET's carriage on
all three major satellite delivered programming services.
BET's financial success continues to provide us with the
means necessary to pursue our strategy of expanding our
cable programming presence and pursuing brand extension
opportunities in businesses that are compatible with our
primary business of providing entertainment, merchandise,
and leisure time activities to the black consumer
marketplace...."
(b) Because the Buyout Group has an overwhelming
controlling interest in the Company's common stock, no third
party will likely bid for BET. Moreover, none of the directors of
BET, all of whom are members of, affiliated with or beholden to
the Buyout Group, can meaningfully consider the Buyout
Transaction or engage in the equivalent of arm's-length
bargaining with the Buyout Group. The Buyout Group will be able
to proceed with the Buyout Transaction without an auction or
other type of market check to maximize value for BET's public
shareholders; and
(c) The Buyout Group timed the announcement of the
Buyout Transaction to place an artificial lid or cap on the
market price for BET's stock to enable them to acquire the
minority stock at the lowest possible price.
19. By reason of their positions with BET and
Liberty's controlling ownership of the Company, defendants are in
possession of non-public information concerning the financial
condition and prospects of BET, and especially the true value and
expected increased future value of BET and its assets, which they
have not disclosed to BET's public stockholders.
20. The proposed Buyout Transaction is wrongful,
unfair and harmful to BET's public stockholders, and represents
an effort by defendants to aggrandize their own financial
position and interests at the expense of and to the detriment of
Class members. The Buyout Transaction is an attempt to deny
plaintiff and the other members of the Class their right to share
proportionately in the true value of BET's valuable assets,
future growth in profits, earnings and dividends, while usurping
the same for the benefit of the Buyout Group on unfair and
inadequate terms.
21. Defendants, in failing to disclose the material
non-public information in their possession as to the value of
BET's assets and the full extent of the future earnings potential
of BET and its expected increase in profitability, have breached
and are breaching their fiduciary duties to the members of the
Class.
22. As a result of defendants' unlawful actions,
plaintiff and the other members of the Class will be damaged in
that they will not receive their fair portion of the value of
BET's assets and business and will be prevented from obtaining
the real value of their equity ownership of the Company.
23. Unless the proposed Buyout Transaction is enjoined
by the Court, defendants will continue to breach their fiduciary
duties owned to the plaintiff and the members of the Class, will
not engage in arm's-length negotiations on the terms of the
Buyout Transaction, will consummate and close the transaction
complained of to the irreparable harm of the members of the
Class.
24. Plaintiff and the other members of the Class have
no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this action to be a proper class action
and certifying plaintiff as the representative of the Class;
(b) granting preliminary and permanent injunctive
relief against consummation of the Buyout Transaction as
described herein;
(c) in the event the Buyout Transaction is
consummated, rescinding the Buyout Transaction and/or awarding
rescissory damages to the Class;
(d) ordering defendants, jointly and severally, to
account to plaintiff and other members of the Class for all
damages suffered and to be suffered by them as the result of the
acts and transactions alleged herein;
(e) awarding plaintiff the costs and disbursements of
the action including allowances for plaintiff's reasonable
attorneys' and experts' fees; and
(f) granting such other and further relief as the
Court may deem just and proper.
ROSENTHAL, MONHAIT, GROSS &
GODDESS, P.A.
By:________________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
WECHSLER HARWOOD HALEBIAN & FEFFER LLP
805 Third Avenue
New York, New York 10022
(212) 935-7400